Chinese Dark Horse Said to Challenge KKR for Bayer Diabetes

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Bayer CEO Marijn Dekkers
Marijn Dekkers, chief executive officer of Bayer AG. Photographer: Jasper Juinen/Bloomberg

Sinocare Inc., a Chinese maker of blood-sugar monitors, teamed up with an arm of the country’s largest brokerage to enter the bidding for Bayer AG’s diabetes devices business, people with knowledge of the matter said.

Sinocare made an offer of about $1 billion with Citic Securities Co.’s direct-investment unit Goldstone Investment Co., the people said, asking not to be identified as the information is private. It has reached out to Chinese banks to seek financing for a potential deal, one of the people said.

The Chinese company is competing with KKR & Co.’s device venture Panasonic Healthcare Co., which has been holding talks to buy the Bayer unit since at least February, the people said. Interest from other bidders and discussions over price have held up any agreement, one of the people said.

Sinocare follows Biosensors International Group Ltd., which is backed by Chinese buyout funds, in seeking overseas acquisitions to gain access to technology and broaden its product base. Changes in diets and more sedentary lifestyles have fueled a surge in chronic conditions in China, which now has more diabetics than any other nation.

Chronic Diseases

Bayer fell 0.7 percent to 136.55 euros at 9:23 a.m. in Frankfurt. Its shares have gained 21 percent this year, giving the company a market value of 113 billion euros.

Health-care spending in China has risen rapidly in recent years, driven by an aging population and government efforts to broaden insurance coverage. The Chinese government allocated over 1 trillion yuan ($161 billion) for medical expenditures last year, a 9.6 percent increase from 2013.

Bayer Chief Executive Officer Marijn Dekkers is selling the diabetes unit and listing a plastics business on the stock market as he focuses on more lucrative life-sciences operations. The company agreed last May to buy Merck & Co.’s over-the-counter drug business for $14.2 billion, and Dekkers also has expressed interest in acquisitions in veterinary medicines.

Sinocare halted trading in Shenzhen from March 24, pending announcement of a “significant matter” that could affect its share price. There is no certainty the Sinocare bidding group will acquire the business, the people said.

Investor-relations officials at Sinocare, based in the central Chinese city of Changsha, didn’t respond to phone calls and e-mails seeking comment. A representative for Goldstone said the fund can’t comment, while spokesmen for Bayer, KKR and Panasonic Healthcare declined to comment.

— With assistance by Manuel Baigorri, Kiel Porter, and Heng Xie

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