Bayer AG sold €1.2 billion in new shares to help fund its takeover of rival Schering AG to create Germany's largest drugmaker. Bayer sold 34 million shares at €34.75 each, the Leverkusen, Germany-based company said in a statement distributed by DGAP. Buyers will get the full-year dividend, Bayer said. The company wants to add Berlin-based Schering's best-selling multiple sclerosis treatment Betaseron and Yasmin contraceptive pills to bolster its health-care unit. The share sale is one of the final steps in financing the €17 billion purchase after Bayer sold its medical diagnostics unit to Siemens AG and issued bonds worth €2.3 billion over the past month. “Bayer is moving ahead with the financing,'' Silke Stegemann, an analyst at Landesbank Rheinland-Pfalz in Mainz, said in an interview. “Bayer is on the right path. A capital increase always puts pressure on the stock.'' Bayer shares fell 36 cents, or 1%, to €35.32 in Frankfurt. The shares are little changed this year. The developer of aspirin said last week it expects net proceeds of €3.6 billion from the sale of the diagnostics division to Siemens. Bayer is also planning to sell its Wolff Walsrode and HC Starck units. New products and demand for cancer drugs, such as Bayer’s Nexavar, will lead growth at the enlarged company CEO Werner Wenning said last month. The drug was approved in the U.S. last December to treat kidney cancer. Bayer HealthCare suffered from the recall of the cholesterol-lowering Baycol in August 2001 and the introduction of generic rivals to its Cipro antibiotic two years later. While first-quarter operating profit at Bayer's health-care and pharmaceutical units more than doubled, their operating margins lag behind U.S. industry peers including Johnson & Johnson and Pfizer Inc. Bayer last month had to raise its bid for Schering by €3 a share to €89 to persuade rival Merck KGaA to tender its 21.8% stake. As many as 6,000 jobs may be cut in the integration, the company has said. Bayer should be able to keep its `A' credit rating, Karl-Heinz Scheunemann, an analyst at Metzler Equity Research in Frankfurt said in a note to clients today. The purchase is the company's largest ever. The extra yield investors demand to hold Bayer's 6% euro-denominated bond due in 2012 instead of government bond was 66.4 basis points, according to RBC Capital. This is more than the 68 basis points the spread hit when Standard & Poor's put the company's debt on credit watch for downgrade on March 24. (Bloomberg)
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
