Bayer AG bond issue to fund Schering AG acquisition

Bayer AG has announced details of a bond issue which it will use to help fund a proposed takeover of Schering AG.

The pharmaceutical giant is issuing a bond worth two billion euros, with investors able to convert the issue into Bayer AG shares.

“The bond will mandatorily convert into new shares, created from the existing conditional capital of Bayer AG, at maturity in June 2009,” Bayer AG confirmed.

The bond is expected to have an “attractive annual coupon” for institutional investors, lying within a range of 6.25 to 6.75 per cent.

Bayer AG said the final coupon and conversion premium would be decided later today, adding that the issue volume for the bonds also had the potential to grow.

While stressing that the expected issue volume will be two billion euros initially, Bayer AG added that it could increase by as much as 300 million euros if the overallotment option is exercised.

Bayer AG hopes to use the net proceeds to help finance its planned acquisition of Schering AG, adding to existing equity capital raising measures worth around four billion euros.

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