Syngenta, which will combine both companies' crop protection assets and seeds activities, is to be headed by Michael Pragnell, the present head of AstraZeneca's agribusiness. "The industry has long lived under the shadow of chemicals, and latterly pharmaceuticals, but we will set our own standards which will become benchmarks," Mr Pragnell said.
The move, a response to troubled global agricultural markets, did not please the market, which forced AstraZeneca's shares down 118p to 2,727p. Analysts cited concerns that the deal may meet regulatory hurdles because of Syngenta's strong position in fungicides and scepticism that the merger's $525m (pounds 328m) cost savings, which include 3,000 job losses, are achievable. The total cost of the link is $950m. Novartis shares gained slightly, rising $13/8 to $431/8 in New York.
The joint group will be the world leader in crop protection and number three in seeds. Genetically modified organisms account for only 2 per cent of Syngenta's $7.9bn pro-forma sales. Mr Pragnell said the group would be technology driven.
Syngenta will be 39 per cent owned by AstraZeneca, with the rest owned by Novartis shareholders. The companies intend to float the business on the London, Zurich, New York and Stockholm exchanges.
There was speculation yesterday that AstraZeneca, which faces a patent expiry in its lead product, Losec, in 2001, will now be an easier takeover target.