German chemicals group Bayer is beginning preparations for a summer sale of its pest control unit Bayer Environmental Sciences (BES), with a potential price tag of more than €2 billion, say sources close to the matter.
Source: Bayer
Source: Bayer
The agrichemicals company is looking to cut its debt in the aftermath of its €63 billion purchase of Monsanto in 2018, and the tens of thousands of court cases and rising compensation costs that it inherited along with the company over the weedkiller Roundup.
While introductory meetings with potential buyers are already underway, an auction will officially start just before or after the summer break, with the aim of signing a deal by the end of this year.
Bayer is making plans to market the unit, which supplies products such as pesticides for golf courses and rodent protection for warehouses, to peers such as Scotts Miracle-Gro, ICL as well as private equity groups, the sources said.
BES last year saw revenues increase by 7.6% to €1.1 billion, while most other units of Bayer’s CropScience division saw sales slump on weak trading in North America.
Read more: Bayer strikes $2bn deal to resolve future Roundup lawsuits
Bayer is only divesting the business for professional users with sales of €600 million, Chief Executive Werner Baumann said in an analyst call last month.
It is anticipated that the part of BES that is being sold will post earnings before interest, tax, depreciation and amortisation of about €200 million in 2021 and some at the company are expecting that it could be valued at 10-12 times that amount.
Since acquiring Monsanto, Bayer has sold off its €6 billion animal health business, its stake in European chemicals park Currenta, as well as consumer brands such as Coppertone and Dr. Scholl's, valued at around €500 million each.
At the end of last year, Bayer's net debt stood at €41.9 billion, with its net financial debt standing at €30 billion.
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