Bayer AG has agreed to sell its pest-control unit to private-equity firm Sinven for $2.6 billion, as the German chemical and pharmaceutical giant seeks to focus on its core agricultural portfolio and reduce debt.
Environmental Science Professionals, a US-based unit of the company, sells insecticides and rodent control to non-farm customers such as warehouses and golf courses. Bayer last year announced its intention to offload the unit, which is part of Bayer’s environmental science business, with sales of about 1 billion euros in 2021, equivalent to $1.1 billion.
“This divestiture represents a very attractive purchase price and allows us to focus on our core agribusinesses,” said Bayer board member and head of the company’s crop science division, Rodrigo Santos.
Bayer shares were up 1.2% on Thursday.
Bayer, the inventor of aspirin, has been seeking to reduce debt since its big bet on agriculture with its $63 billion acquisition of Monsanto in 2018. The purchase was followed by a costly legal battle over Monsanto’s Roundup weedkiller that caused Bayer’s stock price to fall and sparked a backlash among investors against management.
Bayer says the chemical is safe and continues to sell Roundup with glyphosate, the active ingredient in weedkiller, which some plaintiffs have cited to cause cancer. Federal regulators have said that glyphosate is safe and not carcinogenic.
To put an end to the thousands of Roundup claims, Bayer filed a petition in the U.S. Supreme Court in August to invalidate a jury’s decision on a case. In December, the court asked the Biden administration to present its views on whether it should hear Bayer’s appeal and expected a decision sometime this year.
On Thursday, Sinwen said it would consider scaling up innovation and accelerating the development of the environmental science commercial business. In 2021, the division had approximately 800 employees and sales in over 100 countries.
Bayer said it expects the transaction to close in the second half of this year, using the net proceeds to reduce the company’s net financial debt. BofA Securities acted as financial advisor to Bayer, while the law firm Hengler Müller acted as legal advisor.
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