Valeant can have Zoetis, Bayer says. We have our hands full already

Bayer CEO Marijn Dekkers

Whether animal health leader Zoetis ($ZTS) receives any more buyout offers after Valeant's ($VRX) reported approach remains to be seen. But if it does, Bayer's leaders insist a competing bid won't be coming from them.

As the German pharma's management told Bernstein analyst Ronny Gal last week, it weighed buying Zoetis against picking up Merck's ($MRK) OTC unit last year--and it decided to go after the latter, which it agreed to snag last May for $14.2 billion.

Bayer has long considered beefing up its animal health ops, but as CEO Marijn Dekkers put it last month, "it hasn't happened with us yet." The company considered snapping up Novartis' ($NVS) veterinary business before Eli Lilly ($LLY) grabbed it last year, and it also contemplated a move for Zoetis back before Pfizer ($PFE) made clear that it intended to spin the business off. Before Dekkers' time, now-Chairman Werner Wenning bid unsuccessfully for Schering-Plough's animal health unit.

So when the Leverkeusen-based drugmaker announced plans to divest its plastics business--a move that would generate some extra dough--analysts speculated this could finally be the time, and speculators pegged $25 billion company Zoetis as a likely target.

Bayer has already gone on somewhat of an M&A spree lately, though, which would make a large acquisition right now "challenging," Gal wrote. Shortly before inking the Merck consumer health pact, Bayer bought up another OTC company in China's Dihon Pharmaceutical. All told, it's got $21 billion in debt and $13.5 billion in pension liabilities and thus "is a bit starched financially right now," Gal said.

Canada's Valeant, though, hasn't let its recent deals stop it from pursuing Zoetis, according to The Wall Street Journal. The serial acquirer--whose former deal partner, Bill Ackman, has been leveraging investor pressure on Zoetis since acquiring a stake last fall--has approached Zoetis about a potential buyout, the newspaper reported last week.

Special Reports: Top 10 animal health companies of 2013 - Bayer Animal Health - Zoetis | Pharma's top 10 M&A deals of 2014 - Bayer/Merck Consumer Health - Eli Lilly/Novartis Animal Health