Will Consolidation Force Bayer’s Hand?
Bayer is likely to seek a major life sciences M&A deal in the next few years, banking sources have told the news agency Reuters. The German group’s absence from a recent wave of consolidation could undermine its position in markets such as crop protection and animal health, they said.
Bayer, along with several other top-seeded agricultural chemicals players, is seen as challenged by the planned merger of US rivals Dow and DuPont. While creating a stronger rival, the merger of giants is also narrowing the list of potential deal partners for others.
A takeover by Bayer of another company in agricultural chemicals would present antitrust hurdles. Syngenta and Bayer each command about a fifth of the global pesticides market, with Bayer leading the insecticides segment with a 23% share.
In animal health, Reuters points out, Bayer is set to become a second-tier player behind four clear market leaders following a series of major consolidation moves in the sector, capped by the exclusive talks between Sanofi and Boehringer Ingelheim to combine some businesses in a $20 billion asset swap.
At the same time, the investment bankers note that Bayer's strategy chief and CEO-in-waiting Werner Baumann may be content to bide his time. The German group’s agriculture business is one of the most profitable and in healthcare it is still digesting last year’s $14 billion purchase of Merck & Co's consumer health business.