Swiss drugmaker Novartis is ready to sell its animal health subsidiary and has opened its books to Bayer and other rivals interested in a business that could change hands for more than 3 billion euros ($4.1 billion), sources familiar with the matter told Reuters.
Germany's Bayer is seeking to bolster its position as a diversified life sciences company while Novartis Chief Executive Joe Jimenez and Chairman Joerg Reinhardt have said they are considering options for non-core assets that lack the scale to become world leaders.
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Suitors including Bayer, Eli Lilly of the United States and Germany's unlisted Boehringer are conducting due diligence assessments of the business, the financial sources said.
Bayer is interested in expanding its animal health business, CEO Marijn Dekkers told Reuters at a pharmaceuticals conference in London on Tuesday, though he declined to comment on whether it was looking at the Novartis assets.
Eli Lilly was not immediately available for comment outside business hours. Novartis and Boehringer declined to comment.
Combining Bayer's veterinary drug sales of about $1.7 billion with Novartis' $1.1 billion would lift the German company from fifth place to third or fourth in the global animal health market, where former Pfizer subsidiary Zoetis leads the way.
Eli Lilly's veterinary drugs business had $2 billion in sales last year, making it the No.4 player, while Boehringer was sixth with $1.3 billion in sales. Merck & Co and Sanofi sit at No.2 and No.3 respectively, with sales of $3.4 billion and $2.8 billion.
The sector is expected to grow faster than the global economy as ageing western societies spend more money on pets while livestock farming increases in emerging markets, where appetite for meat rises with average household incomes.
The potential sale of Novartis's animal health business would be part of a continuing review of group operations, which last month resulted in the sale of its blood transfusion testing unit to Spain's Grifols for $1.68 billion.
The sources said that Novartis has hired Goldman Sachs to assist it in the review. Goldman declined to comment.