SANOFI-AVENTIS TO CONTEST RHODIA LAWSUITS IN US, BRAZIL

Sanofi-aventis has pledged to contest lawsuits brought by French specialty chemicals company Rhodia in Brazil and the US. The claims relate to environmental liabilities allegedly incurred by sanofi-aventis at its former facilities in Silver Bow, Montana, and Cubatao, in Brazil's Sao Paulo state.

Rhodia recently announced the suits against sanofi aventis, its former parent and largest shareholder, for the costs of cleaning up the two sites the chemicals company inherited. Rhodia was spun off as a separate company after the merger of Rhone-Poulenc and the German company Hoechst created Aventis in 1999.

According to sanofi-aventis, a final deal on the environmental issues was reached in March 2003, attempting to settle environmental claims connected to an original indemnification agreement signed in 1998. The French drug major claims to have made a final payment to former subsidiary Rhodia relating to its former assets last year, which brought total payments to some EUR88mn (US$113.76mn).

Meanwhile, Rhodia claims to have resolved a US$18mn US lawsuit, which obliged the company to carry out remedial work to contamination at the Silver Bow site. However, costs on the settlement appear to have risen to more than US$24mn, with no precise estimate of the expenses to be incurred on the cleanup. Any legal action is thus likely to relate to whether previous agreements allow for further liabilities on sanofi-aventis' part, while the extent of remedial work required at the Cubatao site remains unclear.