The Swiss pharmaceutical giant Novartis said it was exploring the feasibility of a tie-up with with French-German rival Aventis.
Novartis said in a statement released at its Basel headquarters that no decision had been taken yet on a possible deal with Aventis, which is trying to fight off a takeover bid by France's Sanofi-Synthelabo.
"Responding to a request by AMF, the French market authority, Novartis AG confirms that they are exploring the feasibility of a combination with Aventis," the statement said.
"No decision has been taken yet whether or not to pursue such a transaction," it added.
In Paris an Aventis spokesman declined to comment. "We have nothing to add," he said.
Sanofi chief executive Jean-Francois Dehecq, reacting to reports that Novartis was about to reach a deal on a merger with Aventis, said he did not rule out raising the company's offer for Aventis, which it launched on February 17.
Paris analysts noted that the activities of Novartis and Aventis were complementary, which added to the credibility of a possible tie-up.
"A merger with Novartis would be positive," said Marie-Helene Leopold, an analyst with Societe General Equities.
"Their activities offer the potential for good synergies, particularly in the United States."
Analysts at CIC Securities added that redundancies in the operations of Novartis and Aventis would be limited.