Bayer to Sell Animal-Health Unit to Elanco for $7.6 Billion -- Update

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 [e-mail]

(END) Dow Jones Newswires

August 20, 2019 06:23 ET (10:23 GMT)

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