Aventis reported that net profits for 2003 had increased by 17.5 percent to €2.44 billion ($3.07 billion). Earnings per share had also risen by 18.6 percent although a weakening dollar had led to a 4.5 percent drop in sales.

Aventis chief executive Igor Landau presented the 2003 profits at a press conference in London to make the case that the company is strong enough to stand on its own and can reject a €48 billion ($60.4 billion) hostile takeover bid from the French pharmaceutical company Sanofi-Synthélabo.

"Today's announcement highlights how Sanofi's offer fundamentally undervalues Aventis," said Landau. "Their hostile bid is a cheap attempt to transfer their risks to our shareholders," he added.

Landau had previously hinted that there were other drug firms that would make better partners for Aventis, suggesting that Sanofi was using the hostile bid to avoid becoming a target of a takeover itself – a fact not disputed by Sanofi's executive board.

"They need us, but we don't need them,” said Landau last week.

Merger to create European drug giant

Sanofi-Synthélabo made the grab for Aventis on Monday offering five of its shares and €69 for every six Aventis shares.

Dealers and analysts said the Franco-German company's concerted attempt to fend off Sanofi's bid would ultimately fail, but Aventis would force its French rival to increase its offer by at least 15 percent.

Sanofi is pushing for the creation of a new European drug giant which would have a stronger combined presence on the lucrative U.S. market. Aventis pointed out on Thursday that it already has a strong presence there; 38 percent of its core sales are made in the US.

A merger with Sanofi would create the third largest pharmaceutical company in terms of global sales behind the U.S. giant Pfizer Inc. and the British firm GlaxoSmithKline PLC.

With a combined net worth of €16.6 billion, Aventis currently ranks as the sixth largest pharmaceutical company in the world. The other well known German chemical firm, Bayer, comes in at place 18 with a combined net worth of €4.3 billion.

France enthusiastic, Germany worried about job losses

The French government is said to be enthusiastic about the takeover bid which would create a pharmaceutical giant based in Paris.

Germany is less excited about the prospect. Federal Economics Minister Wolfgang Clement warned last week that a merger could result in job losses in Germany if the company moves its focus to Paris.

"The German government has a strong interest in strengthening Aventis' position in Germany rather than weakening it," he said.

A combination of Sanofi's 70,000 strong workforce with Aventis' 69,000 employees could result in as many as 10,000 job cuts in both Germany and France. Trade Unions have said the number of lost jobs could be closer to 25,000.

Aventis now employs some 9,000 German workers who loyally support their chief executive Igor Landau. Michael Klippel the head of the works committee at Aventis said, "We are confident because we believe he will fight. He is not one of these managers who will sell out for a few marks."

Analysts say the takeover battle is extremely personal for the 59 year old Igor Landau. He was instrumental in the merger of the French drug firm Rhône-Poulenc, where he had been an executive for many years, with one of Germany's largest pharmaceutical companies, Hoechst. The deal was the pinnacle of three decades of work and Landau shed the firm's chemical and agricultural operation to focus solely on drugs.

Hostile takeovers rare in Europe

The battle being played out in London between Aventis and Sanofi is unusual for Europe, where hostile takeover attempts are extremely rare. While experts don't expect there to be an increase in hostile bids, they do believe friendly mergers, like the one that created Aventis, will continue.

According to some experts, smaller pharmaceuticals in Europe soon won't be able to keep up with the giants. Professor Klaus Pohle sits on the board of directors of LION BioScience AG, a German software provider for drug companies. He said German drug companies have lost their title as "Chemists of the World" because of a research policy burdened with too much bureaucracy that serves to stifles innovation.

Research and development vital to drug firms surviving

The research, development and release of a new drug onto the market takes approximately 12 years. Then it takes another six to nine years before substantial profits are made. Pohle said the larger the pharmaceutical company, the more money and time it can invest in new projects and the less money is lost when a project fails.

Experts say even if Sanofi's offer transforms itself into a friendly one, Landau, like many chief executives whose company has been targeted by a hostile buyer, is unlikely to gain control of the new company. If the Sanofi bid fails, the smaller French firm is likely to be next in line for a hostile takeover bid.

Aventis shares on Thursday were up 0.7 percent after comfortably beating forecast profits, while suitor Sanofi-Synthélabo stayed at 2.8 percent.