By Neetha Mahadevan
FRANKFURT--Bayer AG (BAYN.XE) said Tuesday it remains committed
to its animal health unit and its struggling materials science
division, even as it invests billions to acquire Merck & Co.
Inc.'s (MRK) consumer care business to bolster its presence in
over-the-counter pharmaceuticals.
"We have a good animal health business and we would like to get
bigger and stronger," Chief Executive Marijn Dekkers said in a
conference call. Earlier Tuesday, Bayer announced a $14.2 billion
deal to buy Merck's consumer care operations and entered a drug
cooperation with the U.S. company.
Mr. Dekkers said he is closely observing developments in the
animal health industry, after Eli Lilly struck a deal to acquire
Novartis AG's animal-health business for $5.4 billion last month,
making Lilly the second-biggest animal-health company by global
revenue, behind Zoetis Inc.
With heightened M&A activity in the pharmaceutical industry,
there has been speculation that Bayer's material sciences division
could be sold to allow the company to focus on health care. Several
analysts had expected that the company could sell the plastics and
chemicals business, which is worth an estimated 7.8 billion euros
($10.8 billion), to fund a deal with Merck.
However, Bayer has dismissed the speculation. Mr. Dekkers said
Bayer is funding the deal exclusively with debt and doesn't need to
raise capital. The company plans to fund the acquisition through a
consortium of banks and then largely refinance through the issuance
of senior and hybrid debt.
Write to Neetha Mahadevan at neetha.mahadevan@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires