FRANKFURT • German drugmaker Bayer is raising €3 billion (S$4.9 billion) towards its planned US$62.5 billion (S$82 billion) takeover of seed maker Monsanto, by selling a 3.6 per cent stake to Singapore investment company Temasek.
Bayer said it had struck a deal with Temasek under which it would issue shares with an entitlement to dividends as of Jan 1, 2017 at an at-market price.
Together with its existing holding in Bayer, Temasek would own about 4 per cent in Bayer after the transaction.
"Temasek takes equity positions in leading companies globally and is a long-term investor," Bayer chief executive Werner Baumann said in a statement on Monday.
"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 billion to €9 billion in volume, while brokerage Baader Helvea estimated it to be worth €4 billion to €6.5 billion, meaning Temasek is footing a sizeable part of the bill.
A company spokesman said Bayer had not yet decided when to carry out the rights issue.
Bayer did not give a per-share price but at 31 million new shares created for Temasek, that would amount to €96.77 each. Bayer shares closed 0.7 per cent lower at €97.98 on Monday ahead of the announcement.
The head of Temasek Europe told a German paper in August that the sovereign wealth fund wanted to make acquisitions in Germany, citing agriculture, pharma and biotech as target industries, among other sectors. The fund is being advised by Mr Michael Diekmann, former CEO of insurer Allianz, and Mr Franz Fehrenbach, supervisory board chairman at Bosch.
- 31mNumber of new Bayer shares created for Temasek that would likely amount to €96.77 each.
Meanwhile, a source familiar with the matter said Temasek was interested in buying into Chinese conglomerate HNA's Hong Kong-based carriers, Hong Kong Airlines and Hong Kong Express Airways.
However, an investment in the unlisted Hong Kong carriers by Temasek remains subject to a due diligence process that has yet to begin, said the source.
Temasek would likely emerge as only a minority holder in the Hong Kong airlines - which control valuable slots at the city's capacity-constrained airport - if a deal is completed, the source said.
Temasek and the debt-laden HNA, an aviation-to-financial services conglomerate, last week signed a memorandum of understanding to explore business partnerships in aviation and logistics.
A second source familiar with the matter said HNA is looking to raise funds for the Hong Kong airlines and that Temasek is a potential investor.
Buying into the Hong Kong airlines would help Temasek get an aviation foothold closer to mainland China, in a market dominated by Cathay Pacific Airways.
Temasek is the majority shareholder in Singapore Airlines, which sources said was not associated with the potential investment in the Hong Kong airlines.
Temasek and HNA declined to comment.