German drugs group Bayer will buy rival Roche's over-the-counter drugs unit for €2.38 billion, it said yesterday, paying more than expected to boost its healthcare profits.
The deal comes shortly after Bayer's decision to spin off to shareholders its Lanxess chemicals unit, representing a fifth of sales, and furthers the transformation of the 141-year-old chemicals and drugs group, often criticised as slow to change.
Another part of the overhaul is nearing with the likely sale of Bayer's blood products unit to either Bain Capital or the Carlyle Group for over €400 million, which will help finance the Roche deal.
But worries that the Roche unit acquisition price was too high sent Bayer stock down 1.6 per cent to €21.90 at the close.
The deal also cost Bayer a cut in its debt ratings from credit ratings agency Standard & Poor's, which said that the acquisition would leave the company with less cash available to pay bondholders.
Bayer, which invented painkiller aspirin more than a century ago, said that the deal would create a company with sales of €2.4 billion and catapult it into the world's over-the-counter drugs top three along with Johnson & Johnson and GlaxoSmithKline.
Roche chief executive Mr Franz Humer told a conference call that the company's major disposals were now completed, and that money from the deal would be used to strengthen the balance sheet and to expand the firm's core business.
