Bayer Said to Explore Sale of $2.5 Billion Diabetes Unit

By Manuel Baigorri, Aaron Kirchfeld and Kiel Porter

Bayer AG (BAYN) is exploring the sale of its diabetes device business as the German company focuses on faster-growing medicines, according to people with knowledge of the matter.
Bayer, based in Leverkusen, Germany, is working with Credit Suisse Group AG (CSGN) on the potential sale, three of the people said, asking not to be identified because the process is private. Private-equity firms such as Cinven Ltd., EQT Partners AB, KKR & Co. (KKR) and Triton Advisers Ltd. may consider bidding for the unit, which could fetch between 1 billion euros and 2 billion euros ($2.5 billion), the people said.
Bayer Chief Executive Officer Marijn Dekkers is selling
peripheral units as he focuses on more lucrative life-sciences businesses. In addition to the diabetes sale, the company plans to list its plastics unit on the stock market. It agreed in May to buy Merck & Co.’s over-the-counter drug business for $14.2 billion, and Dekkers also has expressed interest in acquisitions in veterinary medicines.
“It probably would be better to concentrate on their growth business, which is the pharma pipeline and the animal-health business,” said Ulle Woerner, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany. “It’s going to be hard to sell it at a good price.”

Photographer: Hannelore Foerster/Bloomberg

Marijn Dekkers, Chief Executive Officer of Bayer AG, is selling peripheral units as he... Read More

Bayer’s shares rose as much as 1.4 percent to 119.10 euros in German trading, giving the company a market value of about 98 billion euros. Zoetis gained 1.6 percent to $44.58 in New York yesterday, a new closing high.

Zoetis

The German firm is interested in Zoetis Inc. (ZTS), the $22 billion animal-health company separated from Pfizer Inc., according to one of the people. Bayer sees no rush to bid for Zoetis because no auction has started and it aims to raise money from the plastics unit and diabetes sale first, the person said.
Zoetis earlier this month adopted a poison-pill shareholder plan to help block a hostile takeover after activist investor Bill Ackman took an 8.5 percent stake. Such investments could lead to pressure on Zoetis for a sale, restructuring or increased dividends and share buybacks.
Representatives for Bayer, Credit Suisse, Zoetis, KKR, Cinven, EQT and Triton declined to comment.
Bayer’s diabetes unit makes products including the blood-glucose meter Contour, which had annual sales of more than 700 million euros in 2013, according to the annual report. The business is part of the health-care unit. A sale would mark a turnaround in strategy after Joerg Reinhardt, former chief executive officer of Bayer Healthcare, said in January last year that the company had no plans to sell its diabetes unit after evaluating different options.
Last month, Bayer raised its revenue and profit forecasts, citing growing sales of new medicines, the addition of Merck & Co.’s consumer-health business and the weakness of the euro.