Bayer AG will buy Roche's over-the-counter (OTC) drugs unit for 2.38 billion euros ($2.94 billion), the German group said on Monday, paying more than expected to boost its healthcare profits.
The deal comes shortly after Bayer's decision to spin off to shareholders its Lanxess chemicals unit, representing a fifth of sales, and furthers the transformation of the 141-year-old chemicals and drugs group often criticised as slow to change.
But worries that the acquisition price was too high sent Bayer stock down 3.4 percent to 21.50 euros by 1050 GMT, making it the top loser on Frankfurt's DAX index. Roche was down 0.4 percent at 123.5 Swiss francs.
Bayer, which invented painkiller Aspirin more than a century ago, said the deal would create a company with sales of 2.4 billion euros and catapult it into the world's OTC drugs top three along with Johnson & Johnson and GlaxoSmithKline Plc from No 6 last year.
It would bring under one roof Aspirin, Bayer's antacid Alka-Seltzer and Roche's Rennie digestive tablets. Roche's biggest segment is vitamins, while Bayer's is painkillers.
Analysts said the deal was positive for both companies, though the price was better for Roche than for Bayer.
"It's strategically the right move (for Bayer), though a touch expensive," said Sal. Oppenheim analyst Ludger Mues. A Swiss-based analyst said: "The sale price is above my forecast and that of the market."
Bayer Chief Executive Werner Wenning told a conference call that his aim was to be number one in OTC. "It was and is our enunciated goal to enlarge our OTC business further and become number one world-wide... we are a big step closer," he said.
He said Bayer was well on the way to selling its blood plasma business, a disposal analysts say could fetch some 500 million euros and lessen the burden of the Roche payment.
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