Bayer to sell diabetes devices unit to Panasonic Healthcare
10 Jun 2015
Bayer AG plans to sell its diabetes devices unit to Panasonic Healthcare Co, a joint venture backed by buyout firm KKR & Co, for about €1 billion euros ($1.15 billion).
With the move, the company would exit a business hobbled by ageing products and declining margins.
The blood-glucose monitoring systems and other devices the unit makes are used by some of the 350 million people who live with diabetes, Leverkusen, Germany-based Bayer and Tokyo-based Panasonic Healthcare said in a statement today.
Bayer chief executive officer Marijn Dekkers was shedding peripheral units as he looked to focus more on lucrative life-sciences operations according to commentators.
The company's blood glucose monitors are struggling to compete with a new generation of products. The company also intends to list its plastics unit on the stock market in coming months.
''Bayer has been looking to sell this business for several years and management was frustrated by its negative effect on growth and margins,'' Alistair Campbell, an analyst at Berenberg, and colleagues said in a note to clients.
Panasonic Healthcare is likely to combine the business with its own to improve counter price pressures and expand in countries such as China, which had a third of all diabetics.
Over 80 per cent of diabetes deaths occured in low-and middle-income countries, according to the World Health Organization.
The sale will include the leading Contour portfolio of blood glucose monitoring meters and strips, as well as other products such as Breeze, Elite, and Microle, lancing devices.
Closing of the transaction was subject to usual conditions, including relevant antitrust clearance, and was expected to happen in the first quarter of 2016.
Bayers said in a press release, "We are confident that the sale of our Diabetes Care business to our long-standing partner Panasonic Healthcare, with the strong backing of KKR, will support the long-term sustainability of this portfolio," said Werner Baumann, member of the Board of Management of Bayer AG and CEO of Bayer HealthCare.
Bayer's Diabetes Care business is a technology leader in blood glucose monitoring systems, lancing devices and diabetes management software. The business accounted for ¥909 million in sales in 2014.