Bayer ups forecasts after Monsanto takeover deal

FRANKFURT — German chemicals giant Bayer said Tuesday it had increased its earnings and profits forecasts after signing a deal to take over US seeds and pesticides maker Monsanto.

"We are optimistic for the medium-term development of Bayer and have set ourselves correspondingly ambitious targets," Chief Executive Werner Baumann said in a statement.

In the crop science division that will integrate Monsanto, Bayer said it would grow sales faster than the market and increase its profit margin to "more than 30 per cent" after 2020, three years after the merger is slated to be finalised.

Between them, Monsanto and Bayer's crops division brought in 23.1 billion euros ($25.8 billion) in sales in 2015.

Bayer justified the predictions with a "broad product palette and research and development pipeline" for the two companies, adding that the merged firms would bring new products to market faster.

The 58.8-billion-euro deal is the largest takeover in history for a German firm and would create a giant in the agribusiness sector.

But the tie-up still has to be voted through by Monsanto shareholders and pass regulators' scrutiny in both Europe and the US.

Environmental groups on both sides of the Atlantic have promised fierce opposition to the deal.

Baumann said the pharmaceuticals division, one of two other major business areas, looked forward to "particularly high growth in sales and margins".

The prescription medicines unit would target annual sales growth of 6 per cent on average until the end of 2018, the firm said, and boost margins to "between 32 and 34 per cent" compared with 2015's 30 per cent.

Bayer pointed to a stable of five new medications — now forecast to bring in 10 billion euros in annual sales, up from 7.5 billion — and a "highly promising" pipeline in the division to explain its optimism.

"By the end of 2023, we are planning to launch at least 20 new products in pharmaceuticals," Baumann said.

Meanwhile, the consumer health unit aims to increase sales and margins by focusing on its globally recognised brands, such as aspirin, and key markets, including the US, Russia, China and Brazil.

Bayer added that the group would "exhaust the potential for licensing previously prescription-only medications for self-medication" as well as developing new digital health offerings.