Bayer's €8B animal health sale stirs up private equity shoppers: FT

Bayer
Bayer investors have been unhappy with management about recent Roundup cancer verdicts after the company's massive Monsanto buyout. (Bayer)

Amid a massive restructuring effort and following some setbacks in court, Bayer’s proposed animal health sale has churned up some interest.

Private equity groups are shopping the unit, which could fetch up to €8 billion in needed cash for the German conglomerate, the Financial Times reports.  

CVC has brought on advisors to prepare for a bid, the newspaper reports, while other firms Cinven and Permira have considered a joint offer. Advent International is also looking at a bid, and BC Partners could enter the fray in a joint bid, FT reports. 

Analysts have said the outfit could fetch up to €8 billion. If the unit sold at that price, it’d be one of Europe’s largest buyouts in more than a decade, FT points out.  

After earlier denials, Bayer announced plans to sell its animal health unit—plus a pair of consumer brands—back in November as part of a major restructuring effort. In the wake of its Monsanto buyout, the company plans to cut 12,000 staffers to strengthen “core life science businesses” and “to enhance productivity and innovation while significantly improving competitiveness.”

If Bayer can’t sell the animal health unit, the company would consider a spinoff, Bloomberg previously reported, based on its own sources.

Aside from its animal health sale, the company last month offloaded its Coppertone sun protection brand for $550 million and plans to sell foot care brand Dr. Scholl’s this year. 

RELATED: Bayer to cut loose animal health, consumer brands and 12,000 jobs in huge shakeup 

The moves come as Bayer works to integrate Monsanto after the $63 billion merger they completed a year ago. Since that buyout, juries have hit the company with several Roundup cancer verdicts—including a massive $2 billion set of damages last month.

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Meanwhile, Bayer’s shares have lost about half of their value over the last year. Investors aren't happy about that, to say the least; at the company’s annual meeting, 55.5% of shareholders gave a thumbs down to management’s actions in 2018. 

In March, though, CEO Werner Baumann said his team has the board’s support. In an interview with the German newspaper Frankfurter Allgemeine, he said current share price “discounts are greatly exaggerated.” 

Bayer’s move to sell animal health comes after several Big Pharma rivals have already exited the field. Eli Lilly spun off Elanco in an IPO last year, following moves by Sanofi and Pfizer to part ways with their individual animal health units. For its part, Merck & Co. has so far decided to keep its veterinary business despite some pressure to offload the group.

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