Bayer Pharma AG, Administration and laboratory buildings of Bayer HealthCare Pharmaceuticals in Berlin-Wedding on June 14, 2017, Germany from Shutterstock.com

Temasek signs agreement to buy nearly $5 billion worth of shares from Bayer

Bayer announced that the Singapore investment company Temasek Holdings has signed an agreement on Monday (16 April) to subscribe to 31 million new shares of Bayer, corresponding to around 3.6 percent of the capital stock, for total gross proceeds of 3 billion euros (S$4.9 billion).

The German drugmaker stated that under the agreement, Bayer is to issue to a subsidiary of Temasek at an at-market price the new registered (no-par value) shares with an entitlement to dividends as of 1 January 2017.

The company said that on completion of the capital increase, together with its existing shareholdings in Bayer, Temasek will hold approximately 4 percent of the issued capital stock of Bayer. The shares issued to Temasek will not be subject to any lock-up period.

“We are very pleased that Temasek has significantly increased its holding in our company. Temasek takes equity positions in leading companies globally and is a long-term investor. This investment affirms our business strategy including the proposed acquisition of Monsanto, as well as Bayer’s strong growth prospects,” said Bayer CEO Werner Baumann.

“The proceeds from this placement will be taken into account when determining the size of the previously announced share capital increase through a rights offering with subscription rights to existing shareholders to finance the proposed acquisition of Monsanto,” it noted.

Earlier this month, Bernstein analysts put the expected rights issue at 7 to 9 billion euros in volume, while brokerage Baader Helvea estimated it to be worth 4 to 6.5 billion euros, which means that Temasek is footing a sizable part of the bill.

A company spokesman of Bayer said that the company had not yet decided when to carry out the rights issue.

Previously, it said that it would go ahead with the transaction once it has sufficient certainty on the antitrust clearance.

Last week, Bayer unveiled plans to sell its digital farming business to BASF in what a source familiar with the matter said was part of an outline deal with the US Justice Department to secure antitrust approval.

The company has the conditional go-ahead from European regulators.

The drugmaker did not give a per-share price but at 31 million new shares created for Temasek, that would amount to 96.77 euros each. Bayer shares closed 0.7 per cent lower at 97.98 euros on Monday ahead of the announcement.