As Bayer management predicted, it seems as though the German conglomerate’s for-sale animal health business has indeed attracted high interest.
China’s Fosun International, parent of Fosun Pharma, is considering teaming up with private equity firms or other investors for a joint offer for Bayer’s animal health business, Bloomberg reported, citing people familiar with the matter.
No formal bid has been made, deliberations are at an early stage and Fosun might still decide against it, the people said, according to the news service.
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The potentially €8 billion sale has reportedly attracted private equity firms KKR, CVC Capital Partners, Cinven, Advent International, BC Partners and Permira, among others, either as solo bidders or in joint pursuits.
If successful, the takeover would mark another major deal for Fosun since it shelled out $1.1 billion for a 74% stake in India’s injectables-focused Gland Pharma in 2017. Outside of life sciences, the Chinese conglomerate in 2018 snapped up a majority stake in French legacy fashion house Lanvin, but that was a smaller acquisition financially.
Gland has been doing well under Fosun. Thanks to growth of major products such as vancomycin, enoxaparin injection and caspofungin, the Fosun subsidiary generated a year-over-year revenue increase of 26.6% in 2018, and net profit also jumped nearly 40%, Fosun Pharma said in its 2018 annual securities filing.
Rumors emerged last July that Fosun Pharma was in preliminary talks with potential advisers about an Indian IPO for Gland, which could raise about $500 million, Bloomberg reported at the time.
Fosun was originally eyeing an 86% stake of Gland, but later reduced the amount to circumvent the Indian government’s scrutiny. But thanks to a revised pact signed with Gland’s founding family in March, Fosun could gain some additional 3.4 million shares of Gland for no more than $470 million, according to its first-quarter financial disclosure.
Bayer first announced its intention to hive off animal health amid a huge restructuring unveiled last November. After its gigantic $63 billion Monsanto deal, the company has been under pressure to raise cash to beef up its core life sciences portfolio, especially in pharma, where analysts have called its pipeline unexciting.
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As part of the overhaul, Bayer has already inked a pact with Nivea parent Beiersdorf to sell its Coppertone sunscreens for $550 million. And a buyer of its Dr. Scholl’s foot care line could be announced later this year, management has said.
In April, alongside its first-quarter earnings, Bayer said it’s determined the best exit plan for animal health is through a sale—rather than a spinoff as in the case of Eli Lilly's Elanco.
“The interest is very, very high and also very broad,” CEO Werner Baumann said of the animal health unit on the call.