7-Business: Bayer buys CropScience
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-------------------------------- GENET-news --------------------------------
TITLE: Bayer buys CropScience
SOURCE: CNN, USA
DATE: October 2, 2001
------------------ archive: http://www.gene.ch/genet.html ------------------
Bayer buys CropScience
German chemicals company acquires Aventis CropScience for $6.6B, including
debt LONDON (CNN) - Germany's Bayer agreed on Tuesday to buy Aventis's
agrochemicals unit for 7.25 billion ($6.6 billion), including debt. Bayer,
Europe's second largest chemicals company, has been in exclusive talks with
Aventis since July to buy the CropScience business, giving it a leading
position in the $33 billion-a-year agrochemic al market. "Acquiring Aventis
CropScience will make us a world leader in crop science and substantially
boost Bayer's earnings power," said Bayer Chief Executive Manfred Schneider.
With 4 billion sales in 2000, Aventis CropScience employs about 15,300
people in more than 120 countries worldwide. Bayer will combine the unit
with its existing agrochemical business creating Bayer CropScience. "The
combined sales are expected to total between 6.5 billion and 7 billion in
2001," said the company.
Bayer (FBAY) will become the world's second-largest agrochemical company
behind Switzerland's Syngenta. Aventis Crop Science is majority owned by
Aventis, with a 24 percent stake belonging to German drug maker Schering .
American depositary shares for Schering (SHR: up $2.60 to $52.85, Research,
Estimates) surged more than 5 percent in afternoon trading Tuesday. Aventis
(AVS: up $0.07 to $0.52, Research, Estimates) ADS's dropped marginally.
Bayer expects to take a restructuring charge of 500 million for the
acquisition and estimated savings of 500 million a year. The deal is
expected to result in about 4,000 job cuts or 15 percent to 18 percent of
the combined CropScience and Bayer's existing crop protection business. The
purchase is not expected to boost Bayer's earnings until 2004 and will
increase its debt burden to 15 billion next year. The acquisition is
expected to be completed in the first quarter of 2002, the company said.
As part of the agreement, Aventis will be responsible for any potential
liabilities arising from the controversy over StarLink genetically modified
corn, which had been approved for use in animal but not human feed.
StarLink has been found in consumer foods. The moves are expected to come
as a relief to Bayer's investors, who have seen their holdings pounded
after Bayer withdrew in August its cholesterol-lowering drug Baycol that
has been linked to about 52 deaths. The buy of the Crop Science unit is
expected to give Bayer critical mass in the global agrochemicals market.
Once the sale goes through, Schering expects to receive 1.5 billion from
the proceeds. "The proceeds will substantially increase Schering's
financial potential for further acquisitions, co-operations and internal
growth opportunities," said Schering Chief Executive Hubertus Erlen.
"Schering is now a pure pharmaceutical player."
Aventis, the Franco-German drugmaker, unveiled plans last November to
narrow its focus on pharmaceuticals by selling its slow-growing
agricultural products unit.
Rivals of Aventis, which was formed in 1999 by the union of France's Rhone-
Poulenc and Germany's Hoechst, have already separated their farm-chemicals
businesses to trade as separate companies. Anglo-Swedish AstraZeneca and
Swiss drug firm Novartis floated their joint agrochemicals interests as a
new company, Syngenta AG.
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