FRANKFURT: Singapore's state investment company Temasek is set to acquire a 3.6 per cent stake in German drugmaker Bayer for 3 billion euros (S$4.9 billion).
Under the agreement, Bayer would issue the new registered shares with an entitlement to dividends as of Jan 1, 2017, to a subsidiary of Temasek at an at-market price, the drugmaker said in its press release on Monday (Apr 16).
Together with its existing holding in Bayer, Temasek would own about 4 per cent in Bayer after the transaction.
The share sale to Temasek is part of Bayer's efforts to fund its planned US$62.5 billion takeover of seed maker Monsanto.
"Temasek takes equity positions in leading companies globally and is a long-term investor," Bayer chief executive Werner Baumann said in a statement.
"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 month 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, 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 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.