The Bayer Group plans to sell the diagnostics division of Bayer HealthCare to Siemens EUR 4.2 billion. The divestment was approved today by the Bayer Supervisory Board. “This decision is fully in line with our strategy for systematically aligning our health care business. We are concentrating on pharmaceuticals for both humans and animals, and products that can be promoted directly to patients,” says Werner Wenning, Bayer AG management board chairman.
The systems business of the diagnostics division, with its emphasis on hardware, IT networking, and comprehensive equipment service, is subject to different success factors than the other Bayer HealthCare divisions. Wenning said Bayer is therefore divesting these activities as part of the consolidation phase in the diagnostics market. “We are convinced that the successful laboratory equipment business has even better long-term development prospects in a company specializing in medical technology,” he says. Closing of the transaction is expected for the first half of 2007, subject to the approval of the antitrust authorities.
The consumer-influenced diabetes care division is not affected by the transaction, nor is the contrast agents (diagnostic imaging) business of Schering AG, which will form an important part of the future Bayer Schering Pharma AG.
“Bayer HealthCare Diagnostics has grown considerably faster than the market in terms of earnings and profitability over the past three years. So now is the right time to divest this successful business and thereby add value for the Bayer Group. Siemens is the ideal company to continue developing Bayer HealthCare Diagnostics as a core business,” commented Arthur Higgins, Chairman of the Board of Management of Bayer HealthCare AG.
“With this acquisition we are continuing to consistently pursue our strategy of building the industry’s first integrated diagnostics company that combines diagnostic imaging, laboratory diagnostics and clinical information technology under one roof right along the value chain. The aim is to enable trend-setting innovations that improve the quality of health care through early, specific and efficient diagnostic solutions and thus to address the growing global demand for superior health care solutions,” says Erich Reinhardt, CEO and president of Siemens Medical Solutions and member of the managing board of Siemens AG.
For Bayer the after-tax proceeds of the divestment will be about EUR 3.6 billion. Although this transaction has been pursued irrespective of the Schering acquisition and its financing, it will affect it in that the planned EUR 1.3 billion hybrid bond may not be launched or may have a much smaller volume. In addition, the previously announced equity raising of up to EUR 4 billion in connection with the Schering acquisition is now likely to be reduced by EUR 500 million. In March this year Bayer had already issued a mandatory convertible bond in the amount of EUR 2.3 billion as a first step. “The effect of this divestment is to substantially reduce our debt, thus helping to improve our credit profile,” said Wenning.
Sales of Bayer HealthCare Diagnostics rose in 2005 by 8.4 percent to EUR 1.4 billion. The division employs more than 5,000 people worldwide. It offers an extensive portfolio of in-vitro diagnostic products for evaluating and monitoring the therapy of numerous diseases, including cardiovascular disorders, kidney diseases, infections, cancer and diabetes. The business units are Laboratory Testing, including the ADVIA Centaur® and Centaur® CP, ADVIA® Clinical Chemistry, ADVIA LabCell® and WorkCell® Automation, ADVIA® Hematology and Clinitek® Atlas systems; Near Patient Testing, with its Rapidpoint®, Rapidlab®, RapidComm™ and Clinitek® brands; and Molecular Testing, with its Trugene® and Versant® lines of tests and systems.