03 June 2002 14:51 [Source: ICIS news]
LONDON (CNI)--German chemicals and life sciences giant Bayer announced on Monday the completion of its Euro7.25bn ($6.69bn) acquisition of Franco-German agrochemicals company Aventis CropScience (ACS).
Bayer, which is merging its crop protection activities with ACS, said the combined business - Bayer CropScience - will begin operating tomorrow.
Completion of the deal, the biggest acquisition in Bayer's history, follows conditional regulatory approval last week from the US Federal Trade Commission (FTC).
Bayer management board chairman Werner Wenning confirmed today that the conditions imposed by the FTC and, earlier this year, by the European Commission (EC) would oblige the divestment or outlicensing of products with sales totalling between Euro650m and Euro700m.
In welcoming the FTC's decision last week, Wulff said the divestments demanded by the FTC and EC would hit Bayer CropScience's net profits. However, he said the impact would be limited and would not interfere with Bayer's strategic goals for crop science activities.
One-time integration charges are expected to total Euro500m, while annual savings through synergies are also forecast to reach a similar amount which it is hoped will be fully realised by 2005.
Jochen Wulff, Bayer CropScience management board chairman, said the new company has set itself the target of growing sales by about 4% a year, considerably faster than the total market.
"That way we would increase annual sales to more than Euro7bn within the next three to four years, he explained.
"We have had to reduce our sales forecasts compared to our original plan because we have to meet the conditions set by the EU Commission and the FTC. But we are holding on to our strategic goal of achieving a 20% return on sales by 2006."
Bayer, which is now the world's second largest agrochemicals company behind Switzerland's Syngenta, acquired ACS from Franco-German Aventis and Germany's Schering. Aventis confirmed today that it has received around Euro5.7bn in cash and debt deconsolidation through the sale of its 76% stake in ACS. It said the proceeds would be used to further strengthen its pharmaceuticals business through targeted acquisitions, partnering or in-licensing agreements.
Schering said today that it planned to use the Euro1.5bn proceeds from the sale of its 24% stake in ACS to fund strategic acquisitions as well as for internal growth opportunities.
Hubertus Erlen, chief executive and chairman of Schering AG, said: "This transaction is a major step in our successful strategy to concentrate our resources in the pharmaceutical field and to enhance the value of Schering for our shareholders."
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