A new bidder for Bayer?
According to news story by Reuters; “Sinocare 300298.SZ, a Chinese maker of blood-sugar monitors, has teamed up with Citic Securities to enter the bidding for Bayer´s diabetes devices business, Bloomberg reported, citing people with knowledge of the matter.”
Now Diabetic Investor has no reason to doubt this story and it does explain why Panasonic/KKR has not bought the unit yet. Still we can’t help but think this is déjà vu all over again.
As everyone knows this is not the first time Bayer has attempted to sell this unit. The last time around Panasonic/KKR was involved as well as our wine drinking friends in France Sanofi (NYSE:SNY). Bayer thought they had a deal with Sanofi for approximately $1 billion and believing this ended their negotiations with Panasonic/KKR. Well Sanofi being Sanofi they couldn’t consummate the deal and left Bayer stranded at the altar.
Fast forward to today and one has to wonder if Panasonic/KKR is starting to feel like the bride who has been twice jilted. As was widely reported it seemed as though the deal was all but done and Panasonic/KKR would be paying approximately $830 million for the unit.
To be candid we don’t know much about Sinocare and it would difficult to imagine any company being as screwed up as Sanofi when it comes to pulling the trigger but we also know that Bayer overplayed their hand the last time around. The question has Bayer learned from their past mistakes or will they let another deal slip away.
The flip side is will Panasonic/KKR blink and raise their bid or will they once again walk away should Sinocare top their bid. As we have noted all along Panasonic/KKR’s interest is more defensive than offensive, a move designed to protect an investment rather than drive greater revenue.
The danger for Bayer is what happens if both Panasonic/KKR and Sinocare come to their senses and they both walk away. Listen it’s not like there are no other glucose monitoring companies for sale as both Roche and Abbott (NYSE:ABT) would gladly sell their units. While these units would fetch a higher multiple than the Bayer unit they also bring more to the table than the Bayer does. Frankly this is a nightmare scenario for Bayer.
Could it be Bayer who ends up the bride twice jilted? Is it possible that after two failed attempts to sell this unit that they would have to pull it off the market again? Is it possible that Bayer is once again having delusions of grandeur when in reality they should be doing whatever they can to close a deal? Let’s be honest here Bayer should sell this unit at any price they can get, run to the bank and hope the check doesn’t bounce.
We’ve said it before and we’ll say it again there is reason we call this the wacky world of diabetes. A world where anything can and usually does happen. Only in this world will a company be offered almost a billion dollars for a unit which has little hope and get greedy for more. Seriously we honestly wish we were making this stuff up but as many have said there is no cure for stupid.