Sanofi-Aventis and Bristol-Myers Squibb may be close to announcing a friendly takeover deal. A pre-merger deal was thought to have been signed last week, according to an unsourced story in French financial newsletter La Lettre de l’Expansion that was cited by Reuters. The acquisition of BMS, which has a market capitalization of around $51.5 billion, would propel France’s Sanofi-Aventis ahead of Pfizer as the biggest pharmaceutical company by sales and push GlaxoSmithKline into third place. BMS has long been the subject of takeover rumors, with Sanofi-Aventis a likely suitor due to the firms’ partnership on blood thinner Plavix and hypertension drug Avapro. Spokesmen from both companies declined to comment on the takeover talk, according to Reuters. Still, analysts say such a deal would not be surprising considering Sanofi’s need for increased exposure to the US market. Its market capitalization of 95 billion euros ($123 billion) makes it more than twice the size of BMS, but its shares are less highly rated, and analysts believe an acquisition could significantly dilute Sanofi earnings. Takeover speculation has in part propped up BMS shares in recent months. The stock trades on around 21 times forecast 2007 earnings, while Sanofi trades as 13.3 times, noted Reuters. However, any final deal for Sanofi to buy BMS likely would be contingent on the outcome of litigation surrounding Plavix. A patent trial began this month against Canadian generics firm Apotex, and a verdict is not expected until the third quarter. While most companies are waiting out the outcome of the trial, a move by Sanofi to buy its smaller US partner could preempt other companies, such as GlaxoSmithKline or Novartis.