Bayer Takes a Load Off

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To be or not to be? Picture source: Reuters

Bayer is lightening its debt burden ahead of its blockbuster, $66-billion merger with US seedmaker Monsanto, a historic deal billed as the largest tie-up in German corporate history.

The chemicals and pharmaceuticals giant raised €1 billion on Wednesday by selling an 8.5 percent stake in Covestro – a lucrative subsidiary that makes plastics – to institutional investors. Bayer plans to use the proceeds to slash net financial debt below €10 billion.

The sale was the second time this year that Bayer has sold shares in Covestro. In March, it raised €1.5 billion by selling an 11.5-percent stake in the spinoff company.

Bayer has denied that the divestment of shares is related to its mega merger with Monsanto, but the sale would strengthen the company’s balance sheet ahead of a $19 capital increase to help finance the deal. The two companies hope to win regulatory approval for the tie-up this year.

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