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Bayer CFO sees lower Monsanto synergies after divestments

Bayer CFO sees lower Monsanto synergies after divestments

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FILE PHOTO: Monsanto logo is displayed on a screen where the stock is traded on the floor of the NYSE

FILE PHOTO: Monsanto logo is displayed on a screen where the stock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 9, 2016. REUTERS/Brendan McDermid/File Photo

Bayer’s potential synergies from buying U.S. rival Monsanto will be lower than $1.5 billion because of anti-trust divestments, the German company’s Chief Financial Officer told Germany’s Boersen-Zeitung.

The $1.5 billion savings targeted within three years are a “pro forma” synergy goal, which excluded the impact of divestments, Johannes Dietsch told the newspaper.

“The basis for revenue synergies is now lower. We will give an update on the topic of synergies,” Dietsch told the paper.

Last month Bayer said it had agreed to sell crop science businesses to German rival BASF to help win regulatory approval for the takeover of Creve Coeur-based Monsanto.

Dietsch also said Bayer still plans to go ahead with a capital increase, declining to speculate about the size. The capital hike will happen around the time of the closing of the Monsanto deal.

Bayer’s bid to buy seed and chemical company Monsanto is on track to win U.S. antitrust approval by the end of this month, and the sale is expected to finalize in the second quarter.

The $62.5 billion takeover, one of a trio of major deals in the agribusiness sector in recent years, would create a company with a share of more than a quarter of the world’s seed and pesticides market in the fast-consolidating farm supplies market.

Bayer will be preoccupied with reducing its debt levels in the immediate aftermath of a successful Monsanto acquisition, Dietsch told the paper.

When asked whether Bayer faces a “patent cliff” in its pharmaceuticals business once licenses for blockbuster drugs Xarelto and Eylea expire, Dietsch said, “The question is how do you strengthen the pharma pipeline. Do you need a large acquisition or are there other opportunities like cooperations, partnerships licensing deals and perhaps smaller acquisitions?”

“Nobody should expect that when two of our successful products become generic, that we can just replace them in the year after. In the medium term Pharma will be a growing business,” the paper quoted him as saying.

Monsanto chairman and CEO Hugh Grant said he would leave the company once it is acquired.

Monsanto CFO Pierre Courduroux, the company’s top tech executive, Chief Technology Officer Robert Fraley, and General Counsel David Snively will also leave the company shortly after the deal closes, Monsanto announced Monday.

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