Reuters picked up a piece run in the German version of The Financial Times overnight. Then Bloomberg repeated it, but added a twist:
. . . . Bayer AG is interested in buying one of the animal health businesses said to be on the market, Financial Times Deutschland reported, citing people close to the talks.
Merck & Co. and Sanofi-Aventis SA’s Merial unit, as well as Schering-Plough Corp.’s Intervet and parts of Pfizer Inc.’s animal health unit are up for sale, the newspaper said. . . .
The Bloomberg piece concludes by saying -- since Bayer's CEO is known to be opposed to mega-deals -- that Pfizer's Animal Health businesses (those that potentially overlap with its intended target, Wyeth) are the ones Bayer is most likely to acquire, citing The Financial Times analysis (given FT's earlier flip-flopping spree, on the size of these sales, less than two weeks ago, by these same FT reporters, I am not sure I'd fully-credit FT's take, here).
More broadly, I am not sure I agree with that last bit of analysis -- regardless of source. I think it likely that Bayer is bidding on all three, and will see which combination offers the best return on the chunk of capital invested, regardless of size (even though Bayer CEO Werner Wenning had set a "no higher than" ceiling of $1 billion on acquisitions in 2009). I would, however, rule out any attempt by Bayer to create an Animal Health mega-concern, by buying parts of all three companies' interests. That would go against Werner Wenning's prior approach to his businesses, face significant antitrust hurdles and come in at over $8 billion -- well-beyond what Bayer wants to spend.
2 comments:
I think it's pretty clear that Bayer, Lilly, Novartis and Boeringer Ingelheim are the main players in this, and that some combination of those companies will get whatever assets get divested by Merck and Pfizer. Bayer is definitely interested in all of Intervet, no matter what FTD says. But they might bail out if they get a significant portion of Pfizer's deal.
I think you're dead-on here.
And I do think the rumored availability of Pfizer's assets present a bit of a "wild card" -- to potential buyers, now considering whether to bid on Intervet, or Merial.
The wild card is whether Pfizer's assets may be had at a steeper discount, proportionately, than Merial's -- or Intervet's, all things considered.
Thanks for the cogent commentary -- do stop back!
Namaste
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