Despite a portfolio of hundreds of other products, Bayer is still best known as the company that developed the mother of all pharmaceuticals, Aspirin, over 115 years ago. Almost incredibly, Aspirin remains one of Bayer's top-selling products today, with sales still in excess of $1bn annually. It was until recently part of a vast portfolio of different products ranging from polyurethane to flea control, and from antibiotics to insecticides. However, in recent years the group's massive size proved more of a liability than an asset and Bayer has restructured into a collection of smaller and more efficient operating units, some of which have already been split off as independent businesses, while the core company refines its focus on life sciences. The acquisition of domestic rival Schering in 2006 strengthened Bayer's drug portfolio, creating a national champion in Germany's pharmaceutical industry. However that position is coming under increasing pressure from fast-expanding rival Boehringer Ingelheim. Partly in response, the group has sought to expand its already substantial consumer healthcare business, where Aspirin is partnered by other brands with a global reputation including Alka-Seltzer, Aleve and Canesten. In 2014, Bayer agreed to buy the OTC division of Merck & Co, with brands including Claritin and Coppertone, for $14.2bn. It subsequently announced plans to spin-off one of its three existing arms, polymers division Bayer MaterialScience, as a separate company. Two years later it pulled off a bold takeover bid for crop sciences rival Monsanto worth a record $66bn in cash. That deal was finally approved in Apr 2018, 18 months after it was agreed.
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Adbrands Weekly Update 12th Apr 2018: After almost two years of negotiations, Bayer's proposed acquisition of US crop protection rival Monsanto was finally approved by the US Justice Department after both companies agreed to sell off certain additional assets, including the entire vegetable seed division and Bayer's online support service. The merger has already been approved by EU regulators.
Adbrands Weekly Update 19th Oct 2017: Bayer signed off on a conditional deal to offload part of its existing seed development business in an attempt to assuage regulators' concerns over its proposed merger with US rival Monsanto. Dependent upon approval of the Monsanto combination, it committed to sell seed manufacturing units with around $1.3bn in combined sales and 1,800 employees to countrymate BASF. The price tag of a little under $7bn would be used to pay down debt incurred by the Monsanto deal, which carries a massive $57bn price tag.
Adbrands Weekly Update 22nd Sep 2016: Bayer clinched a deal to acquire US seeds rival Monsanto for a whopping $66bn including debt. If completed, it will be the largest ever all-cash acquisition, as well as the biggest international purchase of a US company. After months of negotiations Bayer agreed to raise its offer to $128 per Monsanto share, up from an initial bid of $122. However the deal will need to win the approval of regulators in several countries, and this road may not be smooth. Farmers' groups have already voiced concerns over the potential reduction in competition and threat of higher prices for seeds and crop protection chemicals. Analysts have warned that the deal may also have a negative impact on Bayer's existing pharma and consumer healthcare business, limiting investment or acquisition in that sector. Healthcare currently accounts for 70% of Bayer's annual revenues; the Monsanto deal will reduce this to under 50%.
Adbrands Weekly Update 21st Jul 2016: German pharma and chemicals group Bayer raised its offer for seed developer Monsanto from $62bn to around $64bn, or $125 per share, after receiving additional information about the company. The move came after intensive negotiations between the two sides over a deal reached an impasse, prompting Bayer to reach out to public shareholders. Monsanto took a couple of days before politely declining the latest bid though it has agreed to continue talks. Monsanto's stock is still trading significantly below Bayer's latest offer, a sign that markets are betting the deal won't come off. Some analysts have predicted the company won't take less than $135 per share, a level that may be too rich for Bayer.
Adbrands Weekly Update 26th May 2016: US crop sciences group Monsanto rejected German rival Bayer's opening offer of $62bn in cash, but said it was open to further discussion. Its CEO Hugh Grant admitted that a tie-up would offer "substantial benefits" but said the current price undervalued the business. This is already the biggest takeover ever attempted by a German company, and would set a new global record for an all-cash deal for a single entity. Investors expressed alarm at the terms of such a huge deal mounted so soon by Bayer's newly appointed CEO Werner Baumann, formerly finance director. Only last month, when he took up his role, Baumann promised "evolution, not revolution", and assured the markets, "You shouldn't assume that Bayer will suddenly go off in another direction." Quite the reverse has happened. As a result, Bayer's shares have plunged by 14% to the lowest level since Sept 2013, and could well fall further if Bayer returns to the table with another bid.
Adbrands Weekly Update 19th May 2016: German healthcare and life sciences group Bayer made an unsolicited bid to acquire its crop science rival Monsanto. The price was later disclosed to be around $62bn in cash, more than a third above Monsanto's market value prior to the offer. The company is a US-based specialist in seed cultivation and development, but also controls the leading crop protection brand Roundup. That would fit neatly with Bayer's existing crop chemicals division. However, a successful deal may be a big stretch for Bayer; Monsanto is unlikely to accept anything less than a premium price. More feasible would be the purchase of Bayer's own crop protection business by the US company, or indeed some form of merger or joint venture that would allow both companies to compete more effectively in a rapidly consolidating market. ChemChina is currently in the process of acquiring another key player, Syngenta, while Monsanto's US rivals DuPont and Dow Chemical are also merging.
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Free for all users | see full profile for current activities: Friedrich Bayer was already an experienced trader in natural dyes by the time he established his own factory in 1863 to manufacture synthetic dyes from coal-tar. These offered superior purity and colour and by the time Bayer died in 1880, leaving the business to his sons, the factory was thriving. Later the company diversified into pesticides and eventually pharmaceutical products. Salicin, a natural substance found predominantly in willow leaves, had been recognized for centuries as a remedy for fever and pain. In 1897, a Bayer chemist, Felix Hoffmann, developed a stable powder derived from salicin and tested it successfully on his father's rheumatism. Two years later Bayer launched the powder in soluble form as Aspirin, which rapidly became the world's first "blockbuster" drug. Rather less admirable was another product, introduced in 1898 as a cure for morphine addiction. This product was marketed as Heroin, actually a brandname invented by Bayer, until it was discovered that the new drug was in fact more addictive than the substance it was designed to cure.. The company's rights to the name were subsequently confiscated.
Nevertheless, the massive global success of Aspirin allowed Bayer to expand rapidly, and the company set up a number of international offices, including a factory in North America. (In fact, Bayer had taken its first inroads into the US as early as 1865 when it acquired a interest in a dye factory in New York). In 1909 the company also developed the first form of cheap synthetic rubber, which experienced massive demand as the motoring industry boomed. But with the outbreak of World War I, Bayer began to develop less beneficial products, including the first poison gas used in the trenches. When America entered the war in 1917 the US government confiscated Bayer's North American assets and trademarks and sold them (for $5m) to local company Sterling Winthrop.
In 1925, Bayer and a group of other German chemical businesses including Hoechst and BASF joined forces as IG Farben Trust, creating the country's biggest industrial conglomerate. The group's operations spanned every form of chemical research including photographic materials and pharmaceuticals. The Bayer chemicals business was especially involved with the development of the first polyurethane, and developed the first sulfonamide antibiotic, Prontosil, a miracle drug of the 1930s. The company was also allowed to reestablish links with Sterling Winthrop in the US. Still prohibited from using the Bayer trademark in the US, it formed Bayer of Canada in 1935. However war intervened once again, and IG Farben became deeply involved with the Nazi war effort. It was one of several companies which developed and manufactured the infamous Zyklon B poison gas used in the concentration camps.
In 1945, the allies broke up IG Farben, re-establishing most of the original companies, while their various photographic interests were combined as Agfa, under Bayer's management. Back in North America, Bayer of Canada was confiscated and placed under Sterling's control. During the 1960s, Bayer once again expanded around the globe, developing a wide range of dyes and synthetic plastics. The Bayer trademark was still controlled in North America by Sterling Health, so the German company re-entered the US in 1954 through a dye and pesticides joint venture with Monsanto (which it bought out in 1967). In 1964, Agfa merged with Belgian company Gevaert, and was later bought back by Bayer.
In 1978, Bayer ventured back into the US pharmaceutical industry, acquiring Miles Laboratories, a company which had enjoyed considerable success with Alka-Seltzer, an effervescent alkaline tablet first invented 50 years earlier, and widely used as a remedy for aches and pains as well as alcoholic over-indulgence. Miles became the company's principal US operation, acquiring in turn a number of other healthcare businesses. Bayer also acquired US imaging business Compugraphic in 1989, as well as Canadian rubber company Nova's Polysar in 1990 (now Bayer Sarnia). In 1994, following the acquisition of Sterling Health by SmithKline Beecham, Bayer paid $1bn to reacquire rights to the Bayer and Aspirin brands in the US, as well as another OTC product, Phillips' Milk of Magnesia, first invented by Dr Charles Phillips in 1873.
In 1996, Bayer bought Monsanto's US rubber compounds business for $580m, and formed a joint venture with Swiss pharma business Roche to market its OTC drugs in the US. In 1998, non-core divisions, including a food ingredients business and the Agfa photocopier company were sold off, and the rest of Agfa was floated. Instead, the group acquired US diagnostics business Chiron for $1.1bn, and took a 14% stake in research company Millennium Products. Also that year, Bayer teamed up with SmithKline Beecham to launch a new cholesterol lowering drug. Known as Baycol in the US and Lipobay internationally, this was widely regarded as the group's most important product for several years.
In 1999, Bayer, BASF and Hoechst agreed to combine their textiles operations to form the world's leading dye manufacturer. Bayer also bought US rubber-maker Lyon Chemicals for $2.5bn. But the group came under increasing pressure from shareholders to restructure, or dispose of parts of its business. In particular it was pressed to demonstrate that its healthcare division could hold its own in the rapidly consolidating pharmaceutical industry. In 2000 the group began disposing of its interests in some industrial activities, selling its stake in joint venture Erdolchemie to partner BP Amoco, and reducing its shareholding in dye-manufacturing joint venture DyStar.
Following a series of anthrax terror attacks in the US in late 2001, Bayer jumped into the public eye as the only company to produce large quantities of a suitable anthrax treatment. Yet although the company benefited initially from a huge uplift in sales of Cipro, it soon found itself accused of profiteering from the tragedy, and several US politicians called for the patent to be overruled. Late in the year Bayer substantially boosted its position in the agrochemicals sector with the acquisition for €7.2bn of Aventis CropScience. Bayer sold several of its insecticides to SC Johnson to win clearance for the deal. However, the company was also dealt a huge blow when it was obliged to withdraw Baycol/Lipobay in all markets after evidence of serious side effects in patients who took the cholesterol-lowering medicine in combination with another fat-reducing drug, gemfibrozil. By mid-year the drug had been linked to more than 1,000 cases of health defects, including as many as 100 deaths. Families of several people who died after taking the drug began legal action against Bayer's US subsidiary. The first case to come to court ended in good news for Bayer, when an individual claim for $650m in damages, was dismissed. Although the group has not acknowledged any liability in these cases, it had settled almost 3,000 Baycol lawsuits by the beginning of 2005, at a cost of more than $1bn.
During 2004, Bayer spun off two new biotech respiratory drugs into a separate company, Aerovance, controlled by private equity groups including Apax; and agreed to sell its Bayer Biologicals unit, which makes blood and plasma products, to investment funds Cerberus and Ampersand Ventures for around $590m. That unit was renamed NPS BioTherapeutics.
In 2006, Bayer waded into the bidding battle between German drug companies Merck and Schering, offering €16.3bn to acquire the latter company. (This Merck and Schering have no connection with the US companies Merck & Co and Schering-Plough). Bayer and Schering's respective drugs divisions were merged mid-year under the name Bayer Schering Pharma. See full profile for current activities
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