PARIS, Aug 20: French chemicals and drugs group Rhone-Poulenc SA said on Wednesday that a bid of 27 billion francs ($4.3 billion) had been agreed for the 31.9- per cent of US drugs group Rhone-Poulenc Rorer Inc which it does not already own.

In a statement Rhone-Poulenc said it was raising its bid to $97 per share from an earlier indicated bid of $92. Rhone-Poulenc shares jumped 4.60 per cent to 252.50 at 0900 GMT, with analysts saying they were relieved the bid price was less than $100 per share.

The share price of Rhone-Poulenc Rorer, in which the French group holds a 68.1-per cent stake, rose from $79 on June 26, when the bid intention was announced, to a high of $96. On Tuesday they closed at $95-5/12 in New York.

"Rhone-Poulenc Rorer's board of directors, having received a unanimous recommendation from the special committee composed of independent board members, has given its approval to the offer proposed by Rhone-Poulenc," the company said in a statement.

Rhone-Poulenc's bid will start within five days and is conditional on acceptances of at least 90 per cent of all shares.

Undeterred by a rising dollar and record price levels on Wall Street, Rhone-Poulenc announced its strategic bid intention in June, prior to the expiry of a standstill agreement on July 31.

Rorer appointed a special committee, composed of three independent board members, which hired lawyers and investment bank Goldman Sachs as advisors before making its recommendation.

Rhone-Poulenc said a final agreement was signed between the two companies on Tuesday evening. It stipulates that shares not acquired in the offer will be acquired in a second step merger at the same price.Rhone-Poulenc said in June it planned to finance the 25-billion francs bid through a seven billion capital increase, 13 billion raised from asset sales and the market flotation of a new chemicals and fibre unit.

A Rhone-Poulenc spokeswoman had no immediate comment on Wednesday on the financing of the additional two billion francs.

Rhone-Poulenc plans to keep a majority stake in a new subsidiary regrouping the chemicals and fibres activities, which will get a separate bourse listing in 1998.

"This is an important step in our plan to reinforce our position in life sciences. We are offering an attractive price to Rhone-Poulenc Rorer's minority shareholders and we look forward to completing the transaction quickly," chairman Jean-Rene Fourtou said in a statement.

Rhone, which was privatised in 1993, obtained a majority stake in Rorer in 1990, when Fourtou was already chairman.

The combination of Rhone-Poulenc, Rhone-Poulenc Rorer -which since 1995 includes Fisons of Britain - and Pasteur Merieux Connaught would constitute one of the world's leading drugs group and a leader in veterinary products.The absorption of Rhone-Poulenc Rorer and the separation of chemicals and fibres makes the group more transparent for analysts and investors and will allow its to enjoy the higher price/earnings multiples associated to drugs groups compared to chemical companies, analysts said.

By keeping a majority stake in the chemicals and fibres unit, the group stands to ride the wave of a recovery in earnings in that sector after having born the brunt of years of recession, they said.

The de-merger of chemicals and fibres follows a trend set by Imperial Chemical Industries Plc, which split into ICI and Zeneca Group Plc in 1993 and the 1995 de-merger of Switzerland's Sandoz AG and Clariant AG.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.