October 11, 2018

Bayer mulls selling vet unit, sources say

Bayer AG is considering a sale of its animal health business following its US$63 billion Monsanto acquisition, people familiar with the company's plans told Bloomberg.

Bayer is evaluating animal health as part of a broader review, though a sale isn't imminent, said the people. No final decisions have been made, and it is still possible that Bayer could decide not to go ahead.

Bayer could gain six to seven billion euros (US$6.9 to 8.1 billion) if it sells animal health, Sanford C. Bernstein analysts said in a note this month.

If Bayer decides to divest animal health, a sale is the likeliest option though it could also list the business, one of the people said.

Putting things in perspective, Bayer is the industry's fifth-biggest player, having 5% market share, according to Markus Mayer, an analyst at Baader Bank AG. However, sales have grown, reaching about 1.6 billion euros in 2017 and making it an attractive target.

"We see a high probability Bayer will divest animal health," Mayer said in a note last month. "Particularly as its relative importance has decreased due to the Monsanto acquisition."