China's Fosun Mulls Joint Bid for Bayer Animal Health Arm

(Bloomberg) -- Fosun International Ltd. is considering a bid for Bayer AG’s animal-health business, people familiar with the matter said, a move that could mark a return to big-ticket deals for the Chinese conglomerate backed by billionaire Guo Guangchang.

Fosun has held talks with potential advisers and is considering teaming up with private equity firms or other financial investors for a joint offer, the people said. Bayer could start the sale process as soon as the next few weeks, the people said, asking not to be identified because the matter is private.

China's Fosun Mulls Joint Bid for Bayer Animal Health Arm

The animal-health business could fetch as much as 8 billion euros ($9 billion) and has drawn preliminary interest from potential bidders including KKR & Co., CVC Capital Partners, Advent International, Blackstone Group LP, EQT Partners and Permira, Bloomberg News has reported.

The last time Fosun announced a billion-dollar takeover was nearly three years ago, before Beijing began clamping down on some serial Chinese acquirers, data compiled by Bloomberg show. The government has sought to limit frothy purchases overseas and restricted deals in certain industries after high-profile global buying sprees by some Chinese firms such as Anbang Insurance Group Co. left them saddled with debt.

Fosun Co-President Xu Xiaoliang said in a September 2017 interview that it remains on course to expand its footprint globally, focusing on sectors the government has indicated it would approve of. It still has appetite for more investments: Fosun disclosed last year that it looks at an average of 9,000 potential transactions annually, though it only completes about 100.

Shares of Fosun International have fallen 38% in the past year, compared with a 7.6% decline in the benchmark Hang Seng Index.

Bayer’s animal-health unit sells veterinary products for both pets and livestock. Its best-selling product line is the Advantage flea, tick and worm treatment for small animals. Fosun could help further expand Bayer’s existing business in Asian markets including China, the people said.

Deliberations are at an early stage, and Fosun could still decide against pursuing a formal bid, the people said. A representative for Fosun said the company has no information to disclose, while a representative for Bayer declined to comment.

The German drug and chemical company is under pressure to raise cash and streamline its business portfolio as it wrestles with the fallout from its $63 billion takeover of Monsanto Co. In May, it agreed to sell its Coppertone brand of sun-care products to Beiersdorf AG for $550 million.

Other European companies have also been preparing disposals amid pressure from investors to rekindle growth. Last month, Nestle SA entered exclusive talks to sell its skincare business to a group led by EQT and the Abu Dhabi Investment Authority for 10.2 billion Swiss francs ($10 billion).

©2019 Bloomberg L.P.

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