Bayer to buy Aventis CropScience
SIMON MORGAN, Agence France-Presse, Leverkusen
The troubled German chemicals and pharmaceuticals giant, Bayer, sought to cure its current ills on Tuesday by announcing the biggest acquisition in its history and a move which would catapult it to one of the biggest makers of agrochemicals in the world.
Bayer said in a statement it would pay out 7.25 billion euros (US$6.7 billion), including debt, for Aventis CropScience, the crop protection arm of the Franco-German life sciences giant Aventis.
After nearly three months, negotiations with the current owners (Aventis owns 76 percent and pharmaceuticals specialist holding the other 24 percent), had finally been successfully completed, the statement said.
Schering would receive 1.5 billion euros for its stake.
Bayer hopes the move will help lead it out of its current crisis, sparked by the scandal over its best-selling anti- cholesterol drug Lipobay/Baycol which has been linked to over 50 deaths.
The Lipobay affair has severely side-swiped Bayer's earnings and forced the maker of aspirin into a major strategic rethink.
"Acquiring CropScience will make us a world lead in crop science and substantially boost our earnings power," said Bayer chairman Manfred Schneider.
The deal "again evidences our strategy of investing long-term in core businesses and growth markets."
The business would be bundled into a new separate legal entity called "Bayer CropScience" with combined sales of 6.5-7.0 billion euros this year, "putting Bayer close behind the market leader," Schneider said.
The new company would cover all agrochemical activities, as well as biotechnology and seeds.
It would be headquartered in Monheim, Germany. But Aventis CropScience's main sites in Lyons, France, and Frankfurt would "continue to play significant roles in the new company," Bayer promised.
Bayer CropScience would be headed by Jochen Wulff, currently head of Bayer's crop protection business.
For Wulff, the deal was a "milestone" in Bayer's history.
"We are combining two very successful leaders of our industry with complementary strengths and ideal fit," he said.
Bayer chairman Schneider estimated the move could cut costs by up to 500 million euros a year.
"One-time restructuring charges are expected to reach the same amount."
Bayer would finance the purchase "through new borrowings without increasing equity capital," he added.
Pending approval by the relevant authorities, the deal was expected to be closed in the first quarter of 2002.
Expressly not included in the deal was Aventis-developed StarLink technology for genetically modifying corn.
That meant that Bayer would not be liable for any potential claims linked with the technology, it said.