PE firms gear up to buy Bayer’s animal drugs biz; Bayer ties up with biotech Arvinas

By PharmaCompass

2019-06-06

Impressions: 76 Article

As part of its reorganization and cost-cutting plan, Bayer is selling off its animal drugs business. And private equity firms are gearing up for the battle to buy it.

Bayer had announced plans to dispose of its animal drugs business in November 2018. Though the official sale process is likely to start in the next few weeks.

According to a news report published in Financial Times, Bayer hopes to win back investor confidence after its US$ 63 billion purchase of seeds and chemicals group Monsanto last year, which landed it in trouble over lawsuits that a glyphosate-based weedkiller — Roundup — was causing cancer. Bayer has lost three such lawsuits so far, and has to pay millions of dollars in damages. Last month, a California couple were awarded more than US$ 2 billion in one such case, though the punitive damages are expected to be reduced.

According to analysts, the animal drugs division could fetch US$ 9.03 billion (€8 billion). If it is sold for between US$ 6.77 billion (€6 billion) and US$ 9.03 billion (€8 billion), this sell-off would be one of the five largest European private equity deals since 2008.

Sources quoted in the article say London-based BC Partners is exploring a joint bid for this division along with either a rival buyout firm, a large pension fund or a sovereign wealth fund as a potential partner.

Similarly, Luxembourg-based CVC has hired advisers as it gets ready for the bid. And Cinven and Permira are examining whether to team up for a bid or not, the FT article said. Advent International is also exploring a potential bid. US buyout firms are also likely to evince interest.

Bayer’s animal health division sells veterinary treatments for both pets and livestock, including the best-selling Advantage treatment for fleas and ticks.

Meanwhile, Bayer has tied up with US biotech firm Arvinas Inc to gain access to its experimental protein drugs and crop protection technology in a deal worth up to US$ 750 million.

“This collaboration enables us not only to expand our platform into new therapeutic areas, but also begins a new journey in applying our approach to agriculture,” John Houston, CEO of Arvinas said.

Under the pact, Arvinas will receive an upfront payment, pharmaceutical research and development (R&D) support and a direct equity investment of more than US$ 60 million. It gets Bayer the rights to novel lead structures Arvinas generates in the process.

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