Now should retake the 14th 12th in the world in the health sector

Bayer returned to its roots. After the acquisition of Schering, announced Thursday night to EUR 16.3 billion, the inventor of aspirin announced this weekend that the strengthening of its pharmaceutical activities would continue. "We do not think to buy another big company, but do not exclude the acquisition of product segments," said his boss Werner Wenning at the "Welt am Sonntag". These statements seem to exclude a buyout from Pfizer, generics in sales by the leading world and estimated at some 10 billion euros. After its acquisition of Roche generics for more than 2 billion euros, Bayer was a serious candidate. However, he prefers now segment of specialties (prescribed by medical specialists), point Schering fort.

With the hostile onslaught of compatriot Merck, Schering has welcomed last week the arrival of the Leverkusen group as White Knight. With his new conquest, Bayer is already transforming its structure: its health activities (Health Care), will represent almost half of its turnover of EUR 31.4 billion, against a third party so far, alongside agrochemical (CropScience) and chemistry (Material Science).

According to several analysts, this operation might encourage Bayer to surrender its chemical activities and focus on the life sciences. In a conference call Friday, Werner Wenning was however pushed back such a scenario. The financing of its acquisition plan only the sale of two subsidiaries (H.C. Stark and Wolff Walsrode) for 2 billion euros; the rest will be provided by cash of EUR 3 billion, an increase of capital to 4 billion euros and a further credit line.

Powerful synergies

With its offer, the group released Merck of the race. The Darmstadt Group announced that it would not increase its offer (read below). Bayer offers for its share to the shareholders of Schering 86 euros per share, a premium of 12 over the supply of Merck. Above all, it has the clear support of the Berlin lab, including the President of the Executive Board, Hubertus Erlen, called the offer "very attractive".

Bayer has indeed offered to Schering the responsibility of all of its pharmaceutical activities. They will be grouped together in Berlin and famous Bayer-Schering-Pharma, while remaining a subdivision of the Health Care industry. With synergies of EUR 700 million as of 2009, the operation provides for suppression of 6,000 positions in the world, or one-tenth of the joint staff in the pharmacy. Werner Wenning did not geographical details of the restructuring, but sacrifices should reach before any abroad and concern only 600 posts in Germany.

A political and national issue

To convince the political camp, the pattern of Bayer met with the Minister-President of Berlin, where Schering is one of the largest employers, and wrote to Angela Merkel. If it does not necessarily share the positions that inspire the actions of its European neighbors for economic patriotism, the Chancellor should in any case accede to the hopes of national champion of Bayer. For Werner Wenning, in effect, "the reconciliation of Bayer and Schering is the best solution to give back to the Germany more value as a pharmaceutical site.

In the 1980s, the country was indeed known as "the pharmacy of the world", he recalled. It was prior to the merger of Höchst with Rhône-Poulenc (which the giant Aventis merger) and also before the turmoil has wiped Bayer in that trade. Group has indeed almost disappeared from the scene after the spectacular, in August 2001, of its drug Lipobay, also known under the name of Baycol. Suspected of having caused the death of dozens of patients, this anti-diabetic resulted in prosecutions, without end, which were practically ruined Bayer and failed to ever destroy its ambitions in the pharmaceutical sector. Now, should retake the 14th 12th in the world in the health sector.