Bayer Finalizes Purchase Of Aventis CropScience; Conglomerate Seeks
Partner From Europe to Boost Sales at Drug Division By Vanessa Fuhrmans
10/03/2001, The Wall Street Journal Page
Bayer AG's chief executive said the company would seek a European partner for its ailing pharmaceutical business as it wrapped up a deal to buy Aventis CropScience for 5.35 billion euros ($4.9 billion), plus the assumption of 1.9 billion euros in debt.
The search for a pharmaceutical partner follows Bayer's sudden withdrawal in August of its star anticholesterol drug, Baycol, after it was blamed for the death of more than 50 people. The company weighed selling its pharmaceutical business but instead decided to consider a majority-owned joint venture with another company to jump-start faltering sales.
Speaking on CNBC yesterday, Chief Executive Manfred Schneider said Bayer would look to Europe first for a strategic partner. "American pharmaceutical companies are too big for us," he said. Finding a smaller partner would "solve the problem [of growth] for both sides," he said.
Finding a partner with significant sales could prove difficult, though, especially if Bayer insists on keeping control of its drug business. Europe's major pharmaceutical companies, such as Roche Holding Ltd., are looking to expand, but have balked at ceding control to a partner and would prefer to acquire in the U.S., the world's most lucrative drug market.
The Aventis CropScience acquisition, meanwhile, is Bayer's largest to date and underscores its intent to expand in both drugs and chemicals. The purchase vaults it from seventh to second place among global agrochemical companies, behind Syngenta AG of Switzerland.
Bayer plans to finance the acquisition through additional borrowing, raising its net indebtedness to about 15 billion euros. That level will prevent Bayer from making further large acquisitions, said Bayer's finance chief, Werner Wenning.
Mr. Wenning said Bayer would step up cost-saving measures, cutting an additional 4,000 jobs as it merges Aventis CropScience with its own crop-protection business, and 1,250 more jobs at its pharmaceuticals division.
Aventis SA, which owns 76% of Aventis CropScience, is expected to reap roughly 3.8 billion euros from the sale, while Schering AG, which owns the remainder, will receive about 1.5 billion euros.
Top agrochemical companies by 2000 sales, in millions of U.S. dollars
Syngenta -- $6,796 Bayer* (includes Aventis CropScience) -- $5,922 Monsanto -- $5,175 DuPont -- $3,939 BASF -- $3,312 Dow -- $2,782 Sumitomo -- $774 MAI -- $728 FMC -- $660
*Pro forma sales
Source: the companies