Bayer agrees new finance deal to fund Merck consumer care unit purchase

Bayer has taken the first step towards refinancing the bridge loan used to acquire Merck Sharp and Dohme's consumer care business by issuing two hybrid bonds with a combined capital of 3.25 billion euros (2.6 billion pounds).

The medical giant announced the deal last month, paying $14.2 billion (8.34 billion pounds) for the consumer care division of the US company, making Bayer the leading supplier of over-the-counter medicine in North America and Latin America.

It financed the acquisition using a bridge loan and has structured the two hybrid loans so they receive equity credit of 50 percent from Bayer's rating agencies, helping preserve the company's A credit rating.

Demand for the bonds from investors has been strong with the orderbook more than three times oversubscribed and Bayer's chief financial officer Werner Baumann described the move as "an important step" in the financing of the Merck Sharp and Dohme deal.

“Our continuously strong backing in the capital markets is the optimal basis for further financing measures," he added.