Bayer AG agreed to sell its pest-control unit to private-equity firm Cinven for $2.6 billion, as the German chemical and drug giant seeks to focus on its core agricultural portfolio and reduce debt.
Environmental Science Professional, a U.S.-based unit of the company, sells pesticides and rodent control to non-farming customers such as warehouses and golf courses. Bayer announced last year its intention to unload the unit, which is part of Bayer’s environmental science business that had around 1 billion euros, equivalent to $1.1 billion, in sales in 2021.
“This divestment represents a very attractive purchase price and allows us to focus on our core agricultural business,” said Rodrigo Santos, Bayer board member and the head of the company’s Crop Science division.
Bayer, the inventor of aspirin, has been seeking to lower debt since its big bet on agriculture with its $63 billion acquisition of Monsanto in 2018 turned sour. The purchase was followed by a costly legal fight over Monsanto’s Roundup weedkiller that led to Bayer’s share price falling and prompted a backlash among investors against management.
Bayer says that the chemical is safe and continues to sell Roundup with glyphosate, the weedkiller’s active ingredient, which some plaintiffs have said causes cancer. Federal regulators have said glyphosate is safe and isn’t carcinogenic.
In a bid to end thousands of Roundup claims, Bayer in August filed a petition with the U.S. Supreme Court to invalidate a jury verdict on one case. In December, the court asked the Biden administration to offer its views on whether it should hear Bayer’s appeal and a decision is expected sometime this year.
On Thursday, Cinven said that it would look to increase innovation and speed up growth of the Environmental Science Professional business. In 2021, the division had around 800 employees and sales in more than 100 countries.
Bayer said it expects the transaction to close in the second half of this year, with the net proceeds used to reduce the company’s net financial debt. BofA Securities acted as financial adviser to Bayer, while law firm Hengeler Mueller acted as legal adviser.
Source: Mint