Overview of Business Performance

Key Events

We made significant progress in implementing our strategic objectives in 2018 with the closing of the Monsanto acquisition. The portfolio, efficiency and structural measures announced in connection with the Bayer 2022 program will further strengthen our core life science businesses.

On June 7, 2018, Bayer acquired 100% of the outstanding shares of Monsanto Company, St. Louis, Missouri, United States (Monsanto), thus completing the biggest acquisition in its history.

In connection with the conditional approval granted by the European Commission in March 2018, Bayer concluded an agreement with BASF SE on April 26, 2018, concerning the sale of Bayer’s global vegetable seed business, certain seed treatments and its digital farming activities for approximately €1.7 billion. This agreement expanded on the agreement already concluded between Bayer and BASF in October 2017, which included the sale of the global glufosinate ammonium business and the related LibertyLink™ technology for herbicide tolerance, as well as a substantial part of the field crop seed business, for a base purchase price of €5.9 billion. The divestments to BASF were completed on August 1, 2018, for all businesses earmarked for divestment excluding the vegetable seed business, which was divested as of August 16, 2018. The closing of these transactions led to the previously imposed hold separate order being lifted. The final purchase price provisionally amounted to approximately €7.4 billion. The transactions resulted in divestment proceeds of approximately €4.1 billion before taxes.

Upon closing of the transaction on June 7, 2018, an amount of US$128 per share was paid out to the Monsanto stockholders, and trading of Monsanto shares on the New York Stock Exchange ceased. The purchase price of US$63 billion included Monsanto’s net debt of approximately US$6 billion. In September 2016, Bayer secured bridge financing from a consortium of 26 banks for the remaining amount of US$57 billion. The required bridge financing, which was drawn on June 7, 2018, was reduced in 2018 through a range of measures that included the following:

  • In January, Bayer sold 10.4% of Covestro shares at a price of €86.25 per share, resulting in total proceeds of €1.8 billion. In May, a further 14.2% of Covestro shares were sold at a price of €75.50 per share. The volume of this transaction amounted to €2.2 billion. Bayer AG now holds just 7.5% of Covestro shares to repay the exchangeable bond that matures in 2020. Bayer AG acquired these shares, which are recognized at fair value through profit or loss as a financial asset, from Bayer Pension Trust, which no longer holds any Covestro shares.
  • In April, the Republic of Singapore subscribed to 31 million new Bayer shares through a subsidiary. This corresponded to around 3.6% of the increased capital stock and generated total gross proceeds of €3 billion.
  • In June, we raised around €6.0 billion in net proceeds from a capital increase against cash contributions with subscription rights for existing Bayer stockholders. For this purpose, approximately 74.6 million new registered (no-par value) shares with entitlement to dividends from January 1, 2018, were issued.
  • In June 2018, Bayer issued bonds of US$15 billion via its subsidiary Bayer U.S. Finance II LLC, Pittsburgh, United States, and bonds of €5 billion via its subsidiary Bayer Capital Corporation B.V., Mijdrecht, Netherlands. All the bonds are guaranteed by Bayer AG.

In addition, Bayer used the operating cash flow and income from the aforementioned divestments to BASF to reduce the bridge financing from an initial US$43 billion on June 7, 2018, to €4.9 billion as of the closing date.

On July 27, 2018, Bayer signed an agreement to divest the prescription dermatology business of Consumer Health. The transfer of the business to LEO Pharma A/S, Ballerup, Denmark, is taking place in two stages. After the closing conditions were satisfied, the U.S. business was transferred on September 4, 2018, while the remaining global prescription dermatology business is expected to be transferred to the acquirer LEO Pharma A/S during the second half of 2019. The portfolio being divested comprises prescription brands including Advantan™, Skinoren™ and Travocort™. The purchase price amounted to €58 million for the U.S. business and €555 million for the rest of the global business, and is subject to customary purchase price adjustments.

In August 2018, a state court jury in San Francisco, United States, awarded approximately US$39 million in compensatory damages and US$250 million in punitive damages to a plaintiff who claimed that a Monsanto product caused his non-Hodgkin lymphoma (NHL). Although the court later reduced the punitive damages to approximately US$39 million, we continue to consider this decision to be incorrect and have filed an appeal with the responsible court. Based on the body of scientific evidence available and the assessments of regulatory authorities worldwide, we continue to believe that we have meritorious defenses and intend to defend ourselves vigorously in this and other product liability lawsuits relating to products containing glyphosate. The next two trials are currently scheduled for February and March 2019 before a federal court jury in San Francisco and a state court jury in California, respectively. A further five proceedings are currently scheduled in California and Missouri for 2019. However, trial dates in all venues remain subject to change depending on court schedules and rulings.

See Note “Related parties” for further details of this set of transactions

On November 29, 2018, Bayer announced a series of portfolio, efficiency and structural measures in connection with the Bayer 2022 program to further strengthen the core life science businesses. Portfolio measures earmarked for implementation in the coming years pertain not only to the Animal Health business and the sale of our interest in German site services provider Currenta, but also to certain product categories of the Consumer Health segment, including in particular our sun care and foot care product lines. In addition, Bayer intends to significantly improve cost structures through the planned efficiency and structural measures.

Compare to Last Year