Sells the Environmental Science division to the financial investor Cinven.
(Photo: dpa)
Dusseldorf Bayer is selling its pest control products business to financial investor Cinven for EUR 2.4 billion. The deal should be completed in the second half of this year, as the agricultural and pharmaceutical group announced on Thursday.
The Leverkusen-based company intends to use the proceeds to reduce its net financial debt. Bayer raked in more with the sale than previously thought. Media reports recently said that the valuation for the business could reach around two billion euros.
Bayer announced a year ago that it would divest its Environmental Science business, which sells pest, disease and weed control products to large non-agricultural customers. The funds are used, for example, in lawn and garden care, on golf courses and in forestry, parks and railway lines.
Last year, the division generated sales of 1.1 billion euros, three percent more than in 2020. It is therefore a smaller part of Bayer’s overall agricultural business. In 2021, the Crop Science division had sales of 20 billion euros. “This divestment allows us to focus on our core agricultural business,” said Rodrigo Santos, Member of the Board of Management of Bayer AG and Head of the Crop Science Division.
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Santos has led the largest Bayer division since the beginning of this year. The Brazilian is the successor to long-time CRO Liam Condon, who moved to British chemicals and materials manufacturer Johnson Matthey as CEO at the turn of the year.
Monsanto continues to charge Bayer
At Bayer, the billions from the sale of Environmental Science are firmly planned. The Leverkusen-based company has been heavily indebted since the takeover of glyphosate manufacturer Monsanto in 2018. At the end of 2021, Bayer’s net debt was around 33 billion euros. The Group has not yet progressed as originally planned in reducing liabilities.
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This is mainly because Bayer had to invest billions in the out-of-court settlement of glyphosate lawsuits in the United States. By the beginning of February, Bayer had either settled 107,000 of a total of 138,000 lawsuits alleging health risks from glyphosate use or dismissed them because they did not meet the comparison criteria.
Bayer has planned around ten billion US dollars (around nine billion euros) for the settlement of all existing lawsuits, which will be paid out gradually. The Group has two options for dealing with future lawsuits. Which one draws depends on a decision by the Supreme Court, the top US court.
Bayer has appealed to the Supreme Court in an earlier, important glyphosate lawsuit it lost. If the court reverses this judgment, the issue of glyphosate lawsuits should be settled for the group. Bayer can then also release the provisions of $4.5 billion made in mid-2021.
However, it is not yet clear whether the judges will accept Bayer’s appeal. Although there are signals in this direction, this will probably not be decided until the second half of the year. If the Supreme Court dismisses the appeal or rules against Bayer in the review, the second option is: Bayer will then use the $4.5 billion it has set aside to settle future lawsuits.
With agency material
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