Bayer to buy Conceptus for $1.1B

by Andrew Bulkeley In Berlin | Published April 30, 2013 at 9:00 AM ET

Bayer AG, the world's biggest maker of contraceptives, on Monday unveiled a $1.1 billion all-cash offer for smaller U.S. rival Conceptus Inc. (NASDAQ:CPTS) to add yet another line of birth-prevention products to its portfolio.

Bayer, of Leverkusen, Germany, said it agreed to pay $31 per Conceptus share, a 19.7% premium to Conceptus' Friday close.

"Bayer is committed to augmenting its organic growth with strategic bolt-on acquisitions. The acquisition of Conceptus represents an excellent fit for our HealthCare business -- specifically in the United States, the world's most important healthcare market," Bayer CEO Marijn Dekkers said in a statement.

The German drug and chemical company became the world's biggest contraceptive company nearly a decade ago with the €16.3 billion ($21.2 billion) acquisition of Berlin's Schering AG. The company is only an occasional buyer, most recently losing out on a bid to expand its vitamins and supplements business when Reckitt Benckiser Group plc trumped its offer for Schiff Nutrition International Inc.

Bayer will get Conceptus' Essure contraceptive procedure, in which doctors place inserts in the fallopian tubes to permanently block conception. The procedure doesn't require surgery and can be performed quickly in a doctor's office.

The Mountain View, Calif.-based target announced Monday first-quarter results showing sales rose 17.5% to $34.1 million. It also swung to a profit of $1.9 million in the period after losing $2.8 million in the first quarter of 2012.

By comparison, Bayer's Yasmin contraceptive pill had €244 million in sales in the first quarter, down 16% over the first quarter of 2012.

The target's shares have risen by about a third in the past year. Last March activist shareholder Camber Capital Management LLC bought a 3.2% Conceptus stake. Camber urged Conceptus to consider its strategic options.

Bayer shares traded €0.09 lower in midday Frankfurt trading at €79.17, valuing the company at €65.5 billion.

A Sullivan & Cromwell LLP team led by Matthew G. Hurd and including Nina F. McIntyre, Zachary J.P. Jacobs, Jonathan Avidor, Bernd P. Delahaye, Henrik P. Patel, Jeanette E. Braun, Nader A. Mousavi, Mehdi Ansari, Ronald E. Creamer Jr. and Matthew J. Brennan advised Bayer. Jones Day advised Bayer on antitrust issues.