Bayer eyes $1B-plus dermatology sale to fund Monsanto quest

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Bayer is closing in on a deal for agrichemicals giant Monsanto--and it’s reportedly mulling over a divestment that could help it get there.

The German drugmaker has brought on JPMorgan Chase to help it weigh options for its dermatology unit, Bloomberg’s sources say. And a sale of the portfolio--which includes eczema therapy Desonate and rosacea treatment Finacea--could bring in more than $1.1 billion, they told the news service.

The process is still in the early stages, though, and Bayer could of course still decide to hang onto the assets. If it did, it wouldn’t be the first time its Monsanto interest triggered divestment rumors that didn’t pan out: Back in May, when the pharma first approached Monsanto, analysts mused that Bayer want to unload its animal health offerings to help fund a takeover.

If Bayer does settle on jettisoning its dermatology products, though, the business could prove attractive to the likes of Nestle’s Galderma, Allergan or Spain’s Almirall, according to Bloomberg’s sources.

Almirall and Allergan have both been in the M&A mix lately, with Almirall particularly in the hunt for skincare buys. As its CEO, Eduardo Sanchiz, told Reuters in July, “there are things” from Valeant’s portfolio “that could interest us” if the embattled drugmaker decides to sell. Allergan, meanwhile, recently tamped down buzz that it’s interested in multiple sclerosis specialist Biogen, but it has inked a pair of eyecare deals over the past month.

Private equity firms could also find Bayer’s dermatology division intriguing, the sources said.

Meanwhile, Bayer is pushing hard to seal a deal for Monsanto. Monday, it said negotiations with its cropcare rival had advanced and that it was willing to hike its bid past $65 billion; later in the week, Reuters reported that the two parties were “close” on price, with an agreement potentially coming within a week or two.

If Monsanto does agree to a buy, though, Bayer’s pharma unit could take a hit down the line, BMI Research’s Craig Smith has said. He sees the move “threatening the company’s key growth drivers--namely pharmaceuticals and consumer healthcare” and “diverting funds away from R&D activities” for those key business segments, he told in-PharmaTechnologist in May.

- get more from Bloomberg
- read more from Reuters on the Monsanto talks 

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