Sector News

Bayer chief may plow spinoff cash into animal health buys

June 1, 2015
Life sciences
Bayer has seen many an M&A opportunity come and go when it comes to bolstering its animal health unit. But once it jettisons its plastics unit–a move that could generate some extra dough–it might finally be ready to strike a deal.
As CEO Marijn Dekkers told Bloomberg, animal health is a “very attractive business for us,” and one it’s interested in expanding. The German pharma currently ranks as the No. 5 player in that market.
“We’ve always looked with interest in it,” he said. “It hasn’t happened with us yet.”
Not that there haven’t been plenty of animal health assets up for grabs lately. Last year, Eli Lilly snapped up Novartis’ veterinary business–a play Bayer had also considered, the news service notes. Before Pfizer made clear that it intended to spin off its animal health business, Dekkers considered making a move there, too. And his predecessor, now Chairman Werner Wenning, posted a similar track record in the space, bidding unsuccessfully for Schering-Plough’s unit.
But analysts have some ideas about where Bayer should look for more animal health firepower once it sets its MaterialScience division free–likely in an IPO, to take place by mid-2016, Bloomberg notes. And that’s at former Pfizer unit Zoetis.
Such a deal would certainly help scale up Bayer’s offerings: Zoetis currently ranks as the largest animal health company out there, last year generating revenue of $4.8 billion.
But if it does go after Zoetis, Bayer might have some competition. Analysts have been speculating that Valeant could be interested in the company, ever since one-time deal partner Pershing Square picked up a Zoetis stake late last year.
And Merck, too, could be on the prowl. Last spring, industry-watchers thought the U.S.-based company might nab Bayer’s animal health unit as part of the $14.2 billion deal that sent its OTC segment to Germany. That didn’t happen, but now Merck may want to beef up and gain the heft skipper Ken Frazier has said its animal health business lacks.
By Carly Helfand

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