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Bayer AG Plans Bond Offering To Finance Acquisition

Bayer AG plans to raise up to €5.35 billion via an offering of bonds within the next year to finance its acquisition of Aventis SA CropScience. Karl-Heinz Kleedoerfer, a senior corporate finance executive at Bayer, says the company is negotiating with a short list of banks to arrange bridge financing for the acquisition. Bayer will then take out the bridge loan by issuing bonds, and possibly commercial paper, within the next year. The eventual bond issue will be led by the bank that extends the bridge loan, though Kleedoerfer would not say with which banks Bayer is talking.

Kleedoerfer says the initial bond offering will be in Europe, though there could be a U.S. 144a private placement.

Bayer (A2/AA-) was recently placed on review for downgrade by Moody's Investors Service and Standard & Poor's, and it is widely expected it will be downgraded due to the substantial increase in leverage required to complete the transaction.

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