FRANKFURT/PARIS - The supervisory board of Aventis SA will meet today to consider the sale of its CropScience business and may confirm exclusive discussions with a buyer, according to a Reuters news report that cited industry sources on Friday.
Germany's Bayer AG, eager to secure a leading position in the concentrated agrochemicals market, is seen as frontrunner to acquire the unit but could sell on insecticides to BASF AG to pre-empt anti-trust problems.
Adding CropScience to its existing business would bring Bayer close to global leader Syngenta, with annual sales of $6.7 billion - though losing insecticides would lop off nearly a billion dollars.
Aventis has been seeking to divest CropScience, the world's third biggest agrochemicals operation, to focus on faster-growing pharmaceuticals, in line with sector peers.
One person close to the company said Aventis aimed to make an announcement before the July 14 holiday in France to satisfy European Union regulations requiring it to consult workers ahead of any divestment.
The statement is likely to contain few details on the sale.
UNIQUE OPPORTUNITY. Duesseldorf-based analyst Andreas Theisen of WestLB Panmure said acquiring CropScience was a "unique chance" for Bayer, which has been frustrated in the past in attempts to build up its life sciences business.
It lost a bidding war for DuPont Pharma to Bristol-Myers Squibb in June and was beaten to Cyanamid, the agrochemicals unit of American Home Products, by BASF last year.
Asked by Reuters this week for an update on the talks, Bayer's Chief Executive Manfred Schneider said: "We are in a process. It will run. I can't say any more."
Aventis, Bayer and BASF all declined to comment further.
U.S. firms Dow Chemical, Monsanto and DuPont also expressed interest in CropScience initially but have since fallen by the wayside.
Analysts said building up agrochemicals made sense for Bayer, whose conglomerate mix of businesses has been criticized by shareholders seeking more focused investments.
Agriculture was the most profitable of Bayer's four divisions in 2000, with a 16 percent return on sales, and analysts have been advising it to focus on expanding its strongest units.
GROWING HERBICIDES. Bayer's business is currently geared to insecticides, while the world market is more orientated to herbicides - so taking on CropScience's herbicides and selling insecticides to BASF would help balance the portfolio.
The sale of CropScience is complicated by Schering AG's 24 percent stake in the business.
The German drug maker said on Thursday it would not sell its stake before the autumn 2001 but industry sources said this was not necessarily an insurmountable obstacle since any deal was unlikely to complete until the year-end.
According to a McKinsey report, the worldwide agrochemicals market - estimated at around $33 billion in 1999 - will grow to $46 billion by 2010, by which time plant biotechnology will grow to a market of $20 billion.
"The focus in the future is on both traditional and plant biotech products in agrochemicals," said Wiebke Schlenzka, who helped write the report.
"It is important to complement the portfolio, Aventis Crop Science has a complete traditional business and significant strength in the growth opportunity sector," said Schlenzka.
The authors are Reuters news writers. Ben Hirschler and Alexander Smith in London provided additional reporting.