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Bayer's animal health sales are finally here, as the German conglomerate restructures for future growth.
Bayer has agreed to sell the animal health sector to his rival Elanco, a spin-off of Eli Lilly, as part of a $ 7.6 billion cash transaction. dollars. Once finalized, this agreement will catapult Elanco as the second largest provider of animal health products in terms of revenues, behind Pfizer's former unit, Zoetis.
As previously suspected, Elanco, heavily in debt, will not pay the full price in cash. In fact, 30% of the payment, or $ 2.3 billion, will come in the form of Elanco shares. Bayer, eager for business, does not seem to worry, claiming that he "intends to sell his stake in Elanco over time."
For Bayer, this "strengthens our focus as a world leader in life sciences," said Bayer director Werner Baumann in a statement. And for Elanco, "[c]Combining Elanco's strong relationship with veterinarians and Bayer's leadership in retail and e-commerce will benefit all our customers, "said Elanco CEO Jeffrey Simmons.
The animal health franchise, which sells popular brands for pets and farms, paid $ 1.8 billion to Bayer's first line of products last year. And the combined organization will continue to generate revenue growth of around 5%, Elanco said. The agreement is expected to be finalized by mid-2020, the companies announced.
The German company first announced that it was planning to exit animal health in November as part of a restructuring aimed at freeing resources for its pharmaceutical and phytotechnical segments. Analysts are worried about the tiny aspect of the Bayer pipeline and the impossibility of closing the gap when its flagship products Xarelto and Eylea cease to be patented in about five years.
RELATED: Ready to ruminate: Roche gives Rozlytrek the green light to challenge Bayer – and reduces it in terms of price
In February, Bayer exercised the option of taking full control of two Loxo Oncology drugs, including the treatment of agnostic cancer by localization against Vitrakvi. However, this medicine is now also threatened by Roche's new entrance, Rozlytrek.
During the process, Bayer signed agreements for the sale of two brands of consumer health products: Coppertone sunscreens are transferred for $ 550 million to Nivea Beiersdorf's manufacturer, and the foot care line. Dr. Scholl's for the private equity firm Yellow Wood Partners for $ 585 million.
Now, with the Elanco agreement – the most important transaction in the planned improvement of Bayer – Baumann's portfolio could soon remove an important element from its to-do list and take a step closer to restoring the confidence of investors. However, the growing number of Roundup procedures related to the Monsanto acquisition remains the main challenge. This is why the Bayer share has suffered and the reason why the shareholders recently voted by a vote of no confidence in the actions of the management.
RELATED: Is Bayer finally preparing for a Roundup agreement? His new legal team suggests it
As of July 11, the number of prosecutions against the Roundup weed killer for cancer had risen from 13,400 in April to 18,400. So far, Bayer has lost the three major lawsuits with damages equivalent to millions of dollars awarded to complainants. More recently, a California state judge reduced $ 86.7 million in awards of more than $ 2 billion shortly after a federal judge San Francisco reduced the grant from more than $ 80 million to $ 25.3 million.
Investors and analysts have called on Bayer to settle the lawsuits as quickly as possible and move on. Bayer seems to be moving towards this goal after hiring an independent lawyer to advise its supervisory board on the Roundup litigation. Baumann himself also said he would consider a "financially reasonable" settlement, according to Bloomberg.
The rumor then ran earlier this month that Bayer would offer $ 8 billion in settlement funds to end the litigation saga. Bernstein analysts have already said that Bayer's stock price underpressure reflected a settlement of about $ 30 billion. However, mediator Ken Feinberg immediately rejected the report. "The compensation was not even discussed in the global mediation talks," he said, quoted by Reuters.
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