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Tuesday, 2 October, 2001, 11:03 GMT 12:03 UK
Bayer buys into agriculture
Bayer's headquarters in Leverkusen
Bayer's purchase will boost its agricultural sales as its drugs unit suffers
German drugs firm Bayer has agreed to buy the crop sciences unit of French rival Aventis for 7.25bn euros ($6.6bn; 4.5bn).

The deal, which was previously expected to be finalised in September, means synergies with existing operations of about 500m euros a year, Bayer said.

But the creation of the resulting Bayer CropScience unit is likely to cost 4,000 jobs - about 15-18% of the combined workforce.

The German company is taking on 2bn euros in debt as part of the deal, the cost of which in restructuring charges will also be about 500m euros.

Fellow German drugs firm Schering will share in the proceeds as a result of its 24% stake in the CropScience division.

Up the rankings

The purchase will see Bayer leap into the global number two spot in the agrichemicals business, more than doubling its existing turnover in the sector to about 6.5-7bn euros, the company said.

As a result, Bayer will take on the Rovral fungicide, used on fruit and vegetables, and the popular pesticide known as Regent.

There are still competition hurdles to be jumped, in both Europe and the US. Regulators are likely to want to check that the merger does not give Bayer undue control over the market for chemicals for specific crops.

Baycol troubles

Bayer has been hit hard in recent weeks by trouble in its drugs unit.

On Tuesday, it announced 1,250 job cuts at its pharmaceutical business, which has been battered by plummeting sales.

Its headline anti-cholesterol drug, Baycol/Lipobay, has been banned around the world over fears of fatal side-effects, generating a string of lawsuits.

The withdrawal of the drug, Bayer's number three pharmaceutical product, cost the company about 800m euros a year.

And the drug unit is now to be split in two, to ensure greater management focus. The two segments, covering chemical and biological products, are both looking for strategic alliances.

See also:

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