LONDON (CNNfn) - Germany's BASF agreed Tuesday to acquire the Cyanamid agricultural products unit of U.S. drug maker American Home Products Corp. (AHP) for $3.8 billion.|
BASF, Europe's largest chemicals firm, will pay $3.8 billion in cash and
assume some debt in a deal that it said will double its crop-protection arm's sales to $3.6 billion, savings of $250 million a year and enhance earnings by 2001.
Cyanamid makes crop-protection and pest-control products such as herbicides, insecticides, fungicides and plant growth regulators. The companies aim to complete the deal by Jul. 1, subject to regulatory approval. BASF (FBAS) shares opened down 0.8 percent 49 euros in Frankfurt Tuesday.
The deal marks the latest move towards consolidation in the agrochemical sector. Swiss-based Novartis and AstraZeneca (AZN) plan to combine their agrochemical businesses in a new firm called Syngenta, though European Union regulators are expected to launch an in-depth probe of that deal Tuesday.
In a separate transaction, AHP said it will sell certain products to an unrelated party for $28 million.
"Since the 1994 acquisition of Cyanamid, the Agricultural Products division has made significant contributions to AHP," John Stafford, the chairman, president and chief executive officer of AHP said in a statement.
"However," he added, "the sale of Cyanamid reflects AHP's strategy to focus on our pharmaceutical, biopharmaceutical, consumer health care and animal health products businesses."
AHP, which acquired the Cyanamid unit in 1994, said the sale would allow it to focus on its core pharmaceutical, consumer health care and animal health products businesses. AHP (AHP: Research, Estimates) has reportedly been looking for a buyer for Cyanamid for more than a month, with Germany's Bayer (FBAY) and DuPont Co. cited by the Wall Street Journal as having expressed interest.
The Cynamid sale comes six weeks after AHP's planned merger with Warner-Lambert fell apart after rival drug firm Pfizer stepped in at the last minute with a higher bid.
Morgan Stanley acted as AHP's financial adviser in the deal.