Roche Again Offering to Buy Bayer Drug Unit
For the second time in a year, Swiss pharmaceuticals giant Roche Holding has approached rival Bayer with a preliminary proposal to buy its pharmaceuticals business--this time offering about $20 billion, sources said Monday.
Roche made a similar offer last year, but was turned down, the sources said. In the latest approach, Roche is offering a mixture of stock and cash in exchange for the business.
Sources familiar with the offer said Bayer, which recently suffered a severe setback because it had to withdraw its anticholesterol drug, Baycol, has not responded to Roche’s plans and is expected to discuss the proposal at a Sept 13. meeting with its supervisory board.
A Roche spokeswoman in Basel, Switzerland, said the company does not comment on speculation. Bayer could not immediately be reached for comment. Earlier this month, Bayer Chief Executive Manfred Schneider said the firm had received overtures from two companies to buy its drug business. He did not name the companies.
Bayer, the inventor of aspirin a century ago, is examining its strategy for its pharmaceuticals business after it was forced to withdraw Baycol on Aug. 8 because of potentially fatal side effects.
Credit Suisse First Boston and Deutsche Bank are helping Bayer on its strategy.
Bayer’s American depositary receipts rose 75 cents to $32 in over-the-counter trading Monday before the news was reported. The shares were trading at $39.50 before the Baycol withdrawal and hit a 52-week low of $30.35 on Aug. 16.
Industry sources familiar with Bayer said its management was reluctant for an outright sale but may not be averse to the idea of portioning off the business to Roche in return for a strategic stake in the Swiss company.
Roche, on the other hand, will find this a good opportunity to dilute the 20% stake that bigger Swiss rival Novartis picked up in the company by buying the holding from financier Martin Ebner’s BZ group this year.
The purchase of the stake by Novartis was not favored by the Oeri and Hoffmann families, which control the majority of voting rights in Roche. It prompted Roche to say publicly that it was not up for sale, but it was not averse to restructuring its capital structure for the right strategic deal.
The Oeri and Hoffmann families control less than 10% of the company’s equity but more than 50% of voting rights. Novartis’ entire 20% stake has full voting rights.
Roche has been under pressure to revitalize its drug business after serious product setbacks in recent years and a slowdown in sales growth--which was 5% in the first half of 2001, below the industry average of 10%.
