Bayer Boosts Finances With $2.6 Billion Covestro Stake Sale

(Bloomberg) -- Bayer AG sold its remaining stake in Covestro AG, raising 2.2 billion euros ($2.6 billion) as the German drugmaker closes in on the planned $66 billion purchase of genetically modified seeds supplier Monsanto Co.

Bayer sold 28.8 million, or 14 percent, of Covestro’s shares for 75.50 euros each, the company said in a statement on Friday. The transaction began after markets closed on Thursday and was managed by Bank of America Corp. and JPMorgan Chase and Co.

The drugmaker now holds 6.8 percent of Covestro shares, which were acquired from Bayer Pension Trust to repay an exchangeable bond maturing in 2020. The trust no longer holds any Covestro shares.

The proceeds will pad Bayer’s balance sheet as it pushes to complete the Monsanto deal, potentially reducing the size of a capital increase as part of a financing package that’s under consideration. The drugmaker cut its forecast for the year Thursday, predicting sales would drop below last year’s 35 billion euros while earnings will decline by a low-single-digit percentage, hit by the strength of the euro.

Covestro shares, which climbed 32 percent in 2017, have slumped 11 percent this year amid investor fears that buoyant markets for the polyurethanes and polycarbonates it produces may be reaching a peak. The Leverkusen, Germany-based company last month reported first-quarter profit about 6 percent higher than estimates, yet it signaled prices will normalize over 2018 with full-year profit only matching 2017’s record result. Shares of Covestro fell 0.3 percent to 76.50 euros at the close Thursday.

--With assistance from Andrew Noël

To contact the reporters on this story: Ruth David in London at rdavid9@bloomberg.net, Manuel Baigorri in London at mbaigorri@bloomberg.net.

To contact the editors responsible for this story: Daniel Hauck at dhauck1@bloomberg.net, Chris Reiter, Chad Thomas

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