Bayer has announced it intends to buy Aventis CropScience for an estimated $4.9 billion. The proposed merger, announced Oct. 2, would be the largest acquisition in Bayer's history and would significantly expand the company's crop protection business.
Manfred Schneider, Chairman of the Board of Management of Bayer AG, says, “Acquiring Aventis CropScience will make us a world leader in crop science and substantially boost Bayer's earnings power.”
Bayer says it will separate its current health care business and the new combined crop protection group into two independent corporate units. Doing this, the company says, will allow it greater flexibility for necessary strategic partnerships. The merged crop protection company is expected to employ 23,000 people.
Schneider emphasizes that the new structure in no way represents a departure from its proven four-pillar strategy. Bayer, he says, will retain health care, agriculture, polymers and chemicals as its core activities but gain greater competitiveness and drive by organizing some of these businesses differently.
“The acquisition of the crop protection activities of Aventis CropScience strengthens another, highly profitable core business, making Bayer one of the world's leading crop protection and biotechnology companies,” Schneider says.
He adds, “Our crop protection business is a core activity of Bayer. By merging the two businesses, we create one of the world's leading companies in this industry — headquartered in Europe with global reach. This new company will be ideally positioned to build on its innovative potential and to pursue a long-term strategy of growth.”
Bayer is expected to increase borrowing and slash approximately 4,000 jobs as a result of the acquisition. Aventis CropScience, which is owned jointly by Aventis and Schering, will assume approximately $1.7 million in debt in the deal.
The acquisition is expected to increase Bayer's profits, at least partly due to the $460 million in anticipated cost savings due to the consolidation of over-lapping research and business operations.