Düsseldorf Bayer sells its professional pest control products to financial investor Cinven for € 2.4 billion. The deal is expected to close in the second half of this year, the agro-pharmaceutical group said on Thursday.
The company based in Leverkusen intends to use the funds to reduce its net financial debt. Bayer made more from sales than previously thought. Media reports recently said the company’s valuation could reach around two billion euros.
A year ago, Bayer announced that it would sell a portion of its Environmental Science division that targets professional users. These are products for pest, disease and weed control for large non-agricultural customers. Funds are used, inter alia, in the care of lawns and gardens, on golf courses and in forestry, parks and railway lines.
The entire Environmental Science division generated sales of 1.1 billion euros last year. Bayer is reluctant to say how much of this is currently a segregated area. According to estimates, the turnover exceeds 600 million euros. It therefore represents a minor part of Bayer’s overall agricultural activity. In 2021, the Crop Science division achieved sales of 20 billion euros.
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“This divestiture allows us to concentrate on our core agricultural business,” said Rodrigo Santos, member of Bayer AG’s board of directors and head of Crop Science. Santos has been the leader of the largest Bayer division since the beginning of this year. The Brazilian is the successor of longtime agriculture director Liam Condon, who moved to Johnson Matthey, a British chemicals and materials manufacturer at the turn of the year.
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At Bayer, billions from the sale of Environmental Sciences are firmly planned. The Leverkusen-based company has been heavily in debt since taking over the glyphosate producer Monsanto in 2018. At the end of 2021, Bayer’s net debt was around € 33 billion. The group has not yet made progress in reducing commitments as originally planned.
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This is largely because Bayer has had to invest billions in the out-of-court settlement of glyphosate lawsuits in the United States. As of early February, Bayer either settled 107,000 of a total of 138,000 lawsuits alleging glyphosate-related health risks or dismissed them because they did not meet the criteria for comparison.
Bayer has planned around ten billion dollars (around nine billion euros) to settle all existing lawsuits, which will be paid off gradually. The group has two options to deal with future lawsuits. Which one is drawn depends on the decision of the Supreme Court, the highest court in the United States.
Bayer appealed to the Supreme Court in an important earlier glyphosate lawsuit that failed. If a court overturns that judgment, the glyphosate lawsuit should be resolved for the group. Bayer could then also release $ 4.5 billion in reserves made in mid-2021.
However, it is not yet clear whether the judges will accept Bayer’s appeal. Although there are signals in this direction, it will probably not be resolved until the second half of the year. If the Supreme Court dismisses the appeal or rules against Bayer in the review, the second option is as follows: Bayer will then use the $ 4.5 billion it has set aside to settle future lawsuits.
With agency material
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