NEWS OF THE WEEK BUSINESS
TWO DIVERSIFIEDS EXIT THE STAGE Bayer's buy takes Aventis out of agrochemicals; DuPont sheds drugs
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week took two more "diversified" life sciences/chemical companies off the stage. After months of negotiations, Bayer signed an agreement to buy the CropScience division of Aventis for $6.6 billion, leavingAventis and Schering, which had a 24% share in the division, as strictly pharmaceutical producers. And Bristol-Myers Squibb completed its $7.8 billion acquisition, announced last June, of DuPont's pharmaceutical operations. Aventis put CropScience up for sale in November 2 0 0 0 and had been in exclusive negotiations with Bayer since July The payment includes $1.4 billion to Schering, $3.5 billion to Aventis, and roughly $1.7 billion in debt assumption. Bayer, one of the few hybrid
chemical/life sciences companies left, will fold CropScience into its own agrochemical division, which recently was carved off into a separate subsidiary. The purchase more than doubles Bayer's sales in agrochemicals and plant science, propelling it into the global number two spot after Syngenta. The new subsidiary, Bayer Crop Science, is expected to have crop protection sales of about $6.4 billion this year; Syngenta's total sales in 2 0 0 0 were roughly $6.8 billion. According to Jochen Wulff, Bayer's designated CEO of the new operation, the new business will be split 33% insecticides, 34% herbicides, 23% fungicides, and 10% products for garden and professional care. Bayer has a goal of synergy savings of about $460 million per
year, "which we will realize in full from 2005," says Chairman Manfred Schneider. One-time restructuring costs of about the same amount will be spread over the next three years, he adds. Restructuring measures are expected to result in some 4,000 job cuts, nearly 20% of the combined workforce of the two units. That may well pose problems: Unions in France, where many CropScience employees are based, are notoriously protective of their members' jobs. Another hurdle will be examination by antitrust authorities. "We cannot exclude the possibility that they will want to take a closer look at one or two products," says Schneider, who nonetheless expects to receive the necessary approvals in first-quarter 2002 at the latest. Bayer continues to seek a partner for its drug business, probably in Europe. Meanwhile, Bristol-Myers Squibb has completed its acquisition of DuPont's pharmaceutical business, bringing to an end DuPont's unsuccessful attempt to become a diversified life sciences company —PATRICIA SHORT
GROWING Field trials in Monheim, Germany, headquarters-to-be of Bayer's enlarged crop science business.
BUSINESS
Nanotube Firm Building Pilot Plant arbon Nanotechnologies Inc. (CNI) has signed an engineering services contract with engineering firm Kellogg Brown & Root (KBR), part of Halliburton, to build a pilot plant for producing single-walled carbon nanotubes. Houston-based CNI was founded early last year by Rice University professor and Nobel Laureate Richard E. Smalley, former Lyondell Petrochemical CEO Bob Gower, and others from Rice University to commercialize carbon nanotubes. The pilot plant, to be completed by the end of this year at KBR's Houston technology center, will produce 200 to 300 g per day. Process improvements to upgrade production efficiency are expected to increase that to about 1 kg per day by mid-2002. CNI intends to be much more than a manufacturer of exotic materials, anticipating that it will participate in carbon nanotube product and market development. "The game is now afoot," Smalley says. "We think we can turn this into something real." CNI will use production from the new plant in collaborative development projects. Electronic uses, such as flat-panel dis-
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plays or electromagnetic shielding, are expected to be among the nearest term applications. The company says it hopes it will be facing the need for commercial-scale production in 18 to 24 MOVING UP Smalley, in front months. of a carbon nanotube laboratory The company has also found a new home, reactor brought from Rice, speaks at "groundbreaking" for moving off the Rice CNI's new pilot plant. campus and now leasing office and laboratory space at KBR's technology center. In April, it received funding of $15 million from chemical industry and high-technology entrepreneurs Gordon Cain and William McMinn.—ANN THAYER
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