Acquisition Alchemy at Bayer
Bayer has bills to pay! After splashing out on the world’s biggest seed maker last year, the pharma giant begun repaying $67 billion. Actually, make that $59.4 billion, as the company just resorted to selling its pets!
There are some companies that mutate into such enormous corporate globs that any acquisition of them seems impossible. Monsanto, the go-to crop company, would have easily fit into that category. Until last year, that is, when German chemical and pharmaceutical giant Bayer took on the challenge of buying it. The deal was immense, with investors made to swallow a $67 billion price tag.
While on-boarding its new giant, hundreds of studies declared Bayer’s weed killer safe. However, just one debatable study was enough to throw up a controversy. The product probably doesn’t cause cancer, but Bayer won’t take any chances when fighting lawsuits. Provisioning for court payouts, now the Germans are doubly worried about the damage to their checkbook!
That’s where Elanco comes in! It’s a company all about protecting animals, and it’s been eyeing up Bayer’s animal drugs business for some time. Recently, it made a move. Bayer needed the money, simple as that, so a trade between its animal care unit and $7.6 billion was swiftly sketched out. Despite Bayer’s share price being unmoved in yesterday’s trading, some investors fear that with livestock farming on the rise and more families welcoming pets into their homes, the fast growing animal health market is a big sacrifice.
The acquisition alchemy is boiling over, with fragments of chemical companies and drug firms flying in all directions. As market players mind their heads, the alpha gets a step ahead. Bayer’s buyout moves are bold, but will they pay off?