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June 9, 1997
Bayer, Planning String of Acquistions, Has Access to $8 Billion in Financing
Frankfurt - German chemical giant Bayer AG has enough cash to finance 15 billion marks ($8 billion) of takeovers, and indicated in March it planned to go on a buying spree.
But so far, it has only bought DuPont Co.'s graphics films and offset printing plates businesses. The takeover by Bayer's Afga-Gevaert Group cost no more than $500 million, analyst say. So now the question is what does Bayer have planned next?
The answer might be nothing. Excusing themselves for not having made more major deals, Bayer officials say acquisitions cost to much nowadays.
According to Peter Blair, analyst at Salomon Brothers, the company can make purchases of up to 14 billion marks, financed entirely by debt. Compare to its German rival Hoechst AG, the company has comparatively little debt and could improve its value if it did something with its cash. While that could be a mega-merger, Bayer is more likely to make a series of smaller purchases, he said.
Unlike Hoechst, Bayer has done so well in recent years
that it has not been forces to launch an ambitious restructuring program.
"Bayer's portfolio is 80% healthy," said Christian Schlimm, analyst
at Schroeder Muenchmeyer Hengst & Co.
Excerpt from Wall Street Journal.