Bayer AG, the German drugmaker preparing to split off its plastics unit, is still considering ways to expand its animal-health division after missing out on earlier takeovers, Chief Executive Officer Marijn Dekkers said.
Analysts have said that proceeds from Bayer’s planned divestiture of the MaterialScience plastics business could be used to help buy a company that would add products for pets and farm animals, such as Zoetis Inc., the market leader and formerly a part of Pfizer Inc.
“We’ve always looked at different animal-health opportunities that have come and gone,” Dekkers said in an interview at Bayer’s headquarters in Leverkusen. “It’s a very attractive business for us,” and “we’ve always looked with interest in it. It hasn’t happened with us yet.”
The company’s animal-health business is the fifth-biggest in the industry, Dekkers said, and Bayer has sought repeatedly to expand it. Eli Lilly & Co. beat Dekkers to Novartis AG’s veterinary business last year, which Bayer also considered. Dekkers weighed whether to make an offer for the Pfizer unit in 2012, before it was clear Zoetis would be spun off. His predecessor, Supervisory Board Chairman Werner Wenning, bid unsuccessfully for Schering-Plough’s animal-health division.
Bayer’s shares, including dividends, have gained 27 percent since the drugmaker said on Sept. 18 that it plans a stock-market listing for MaterialScience. That values the German company at about 110 billion euros ($121 billion). On that basis, Florham Park, New Jersey-based Zoetis has jumped 35 percent in the period, for a market capitalization of $24.6 billion. Bayer was trading down 0.4 percent at 132.85 euros as of 12:34 p.m. in Frankfurt.
An initial public offering of MaterialScience is the most likely option for the unit as Bayer hasn’t received any attractive offers from potential buyers, Dekkers said.
“We prefer an IPO over a spinoff,” he said. “We think that the size of the business, how it’s positioned with its cash flow makes for a very good public company.”
At the same time,“we have a fiduciary responsibility to look at other options if they would come up,” the CEO said. “They have not really come up, though there’s always people who knock on your door.”
Internal work to separate from MaterialScience, whose new name will be unveiled in coming weeks, will be wrapped up by September, and an IPO is targeted to take place by mid-2016 at the latest. The transaction would create Europe’s fourth-largest chemical company with more than 12 billion euros in annual sales. The disposal is part of Bayer’s plan to focus on health-care and crop-science divisions.
Bayer, the inventor of aspirin, has also been reviewing its diabetes glucose-meter business, which is facing pricing pressure from governments, Dekkers said, declining to say when a decision will be made.