Bayer’s medical skin creams draw suitors Lupin, BC Partners, say sources: Reuters

Bayer (BAYGn.DE) has short-listed India’s Lupin (LUPN.NS) and investor BC Partners as prospective buyers of medical skin cream assets in a potential 1 billion euro ($1.1 billion) deal, several people familiar with the sale told Reuters.

Germany’s Bayer has for more than two years sought to narrow the focus of its healthcare division and its planned $66 billion Monsanto (MON.N) takeover has added urgency to that drive.

Bayer has, however, said a debt package and cash call would suffice to finance the Monsanto purchase, its largest ever transaction.

Lupin is mainly attracted by the Bayer dermatology business’s regional presence in North America, where the Indian maker of generic and specialty drugs is keen to expand, one of the sources said. Buyout firm BC Partners, in turn, has for a while tried to add more healthcare assets to its portfolio.

It could not be learned how many other prospective buyers are still in the race.

The Bayer unit sells established skin cream brands such as Desonate against allergic skin reaction, Finacea to ease rosacea symptoms as well as acne treatment Skinoren.

The business is expected to fetch close to 1 billion euros at least, or more than 9 times its expected core earnings of more than 100 million euros.

Lupin was not immediately available for comment, while BC Partners and Bayer declined to comment.

Bayer has been shedding assets such as vascular catheters or blood glucose meters. It is exploring the sale of its $3 billion radiology contrast agents unit but the dermatology auction is taking precedence for now, according to people close to the matter.

Bayer has already looked into initial offers and picked some suitors to advance to the second round of bids, which are due in the coming weeks, the sources said.

Drugmakers Mylan (MYL.O) and Almirall (ALM.MC) as well as Nestle (NESN.S) have lost interest in the asset, they said.

Industry experts said financial investors were attracted by the mature brands’ reliable income stream while drug makers were discouraged by their limited growth prospects.