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Temasek hikes Bayer stake in 3b euro share sale

TEMASEK Holdings warned of increased near-term downside risks even as buoyant stock markets lifted its portfolio to a 12.19 per cent one-year return for the financial year ended March 31, 2018.

[FRANKFURT] German drugmaker Bayer is raising 3 billion euros (S$4.8 billion) towards its planned US$62.5 billion takeover of seed maker Monsanto by selling a 3.6 per cent stake to Singapore's state investment company Temasek.

Bayer said it had struck a deal with Temasek under which it would issue shares with an entitlement to dividends as of January 1, 2017 at an at-market price.

Together with its existing holding in Bayer, Temasek would own about 4 per cent in Bayer after the transaction.

"Temasek takes equity positions in leading companies globally and is a long-term investor," Bayer chief executive Werner Baumann said in a statement.

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"This investment affirms our business strategy including the proposed acquisition of Monsanto, as well as Bayer's strong growth prospects." Bayer added that the proceeds from the placement would be taken into account when setting the size of the previously announced rights issue to fund the Monsanto takeover.

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

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

It has previously said it would go ahead with the transaction once it has sufficient certainty on the antitrust clearance.

Bayer last week 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 (DoJ) to secure antitrust approval.

It already has the conditional go-ahead from European regulators.

Bayer 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.

The head of Temasek Europe told a German paper in August that the sovereign wealth fund wanted to make acquisitions in Germany, citing agriculture, pharma and biotech as target industries, among other sectors.

The fund is being advised by Michael Diekmann, former CEO of insurer Allianz, and Franz Fehrenbach, supervisory board chairman at Bosch.

Temasek was not planning to take an overly proactive role, instead aiming for minority stakes and leaving business to management, Lee was quoted as saying at the time.