Bayer to Sell Animal-Health Unit to Elanco for $7.6 Billion -- Update
August 20 2019 - 5:38AM
Dow Jones News
By Ruth Bender
BERLIN -- Bayer AG is selling its animal-health business to an
American rival for $7.6 billion, part of the German drug and
chemicals giant's plan to divest assets amid mounting legal
liabilities from its Roundup herbicide.
The deal to sell the unit to Elanco Animal Health Inc., based in
Greenfield, Ind., would create a new industry heavyweight in the
business of preventing and treating diseases for pets and
livestock, with the combined company having a market share of
roughly 13%, according to Germany's Baader Bank.
Bayer said it would get $5.3 billion in cash and retain a stake
worth $2.3 billion in Elanco, based on the unaffected 30-day volume
weighted average price on Aug. 6. Bayer said it plans to exit this
stake over time.
The German chemicals and pharmaceutical giant's share price has
slumped since it lost a string of suits arguing that the Roundup
weedkillers it bought as part if its acquisition of Monsanto cause
cancer. In total, some 18,000 plaintiffs have now filed similar
suits.
Bayer said in December it was exploring options to exit its
animal-health business, the smallest of its four units. The move is
part of a wider plan to shed operations that are diverting
resources and management time from its core and bigger drugs and
agriculture divisions, save costs and bring down debt.
The sale will help the Leverkusen, Germany-based company chip
away at its debt load of around EUR35.7 billion ($39.56 billion),
which soared last summer with the acquisition of U.S. agriculture
giant Monsanto Co.
The deal is also a crucial step in Bayer's efforts to regain
investor confidence after a majority of shareholders signaled in
April a lack of confidence in how the company is being run in the
wake of its big bet on Monsanto.
--Ben Dummett contributed to this article.
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
August 20, 2019 06:23 ET (10:23 GMT)
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