Debt Investor Information - February 27, 2019 - Bayer Investor Relations
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Debt Investor
Information
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February 27, 2019
Cautionary Statements Regarding Forward-Looking Information
Forward-Looking Statements
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various
known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial
situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s
public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these
forward-looking statements or to conform them to future events or developments.
2 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Our Purpose: Science for a Better Life
Pharmaceuticals Consumer Health Crop Science
Prescription drugs Over-the-counter medicines, Innovative chemical & biological
dietary supplements and crop protection, seeds & traits,
dermatology products digital technologies & services
3 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Our Strategic Priorities
Group Strategic Priorities Divisional Focus
Positioning businesses to mega-trends
1 Contribution to Health and Nutrition1
Crop Science2
Create a leading innovation engine
that transforms agriculture
Developing a leading portfolio
2 Leadership in our relevant markets Pharmaceuticals
> Deliver growth and create value from
focused leadership strategy
Driving value
3 Long-term Profitable growth
Consumer Health
Focusing on our key strength Maintain a leading OTC position and
4 Innovation improve profitability
1 We also seek to make a responsible contribution to the United Nations Sustainable Development Goals "Good Health and Well-Being" and "Zero Hunger"
2 Includes Animal Health business unit
4 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Our Business: Global Megatrends in Health & Nutrition
Aging Population Growing Population Pressure on Ecosystems
People 60+ +2.2bn +50% -20%
Megatrends
more than people1
through -17%
doubling1 more food and feed
2050 required to meet Harvest losses from 2016 2050
growing demand2 climate change3
Significant loss in
>20% of total population1 arable land per capita4
Societal Preserve and Secure sufficient Use natural resources more
Needs restore health supply of quality food efficiently and responsibly
Our We leverage science to address these societal needs –
Mission with the ultimate goal to improve people’s lives
1 UNDESA 2017 (United Nations Department of Economic and Social Affairs, Population Division (2017). World Population Prospects: The 2017 Revision)
2 FAO 2017, (FAO Global Perspective Studies)
3 Nelson et. al, (2014); FAO 2016 “Climate change and food security”
4 FAOSTAT (accessed Oct 30, 2018) for 1961-2016 data on land, FAO 2012 for 2030 and 2050 data on land, and UNDEDA 2017: World Population Prospects for world population data
5 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Our Position: Global Leadership in Health & Nutrition
€39.6bn 2018 Sales
Crop Science Pharmaceuticals Consumer Health
€14.3bn €16.7bn €5.5bn
#1 Position #2 Position in Cardiovascular #3 Position
Growing ahead of competition over One of the fastest growing Pharma Leading Positions in 7 of the Top 10
last five years on average businesses over the past five years OTC Markets
Best-in-class profitability through Xarelto and Eylea among the world’s Focus categories:
the cycle leading Pharma brands Allergy & Cold, Cough, Sinus and Flu;
Leading portfolio of seed & traits, Innovative medicines in areas of high Nutritionals; Dermatology; Pain and
crop protection and digital farming unmet medical need Cardio; Digestive Health
World-class R&D platform with best Therapeutic focus areas: Cardiology, Concentrated portfolio of 16 mega-
talent and technology in the industry Oncology, Gynecology, Hematology brands with annual sales of >€100m
Positioned to shape the future of and Ophthalmology
agriculture: development of tailored Strong position in emerging markets
solutions to address farmers’ individual Leading in Radiology and Women’s
needs and challenges Health
6 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Bayer Key Financials
2018 Sales in €bn1 Capital Research & 2018 EBITDA before Special Items1
Sales
Expenditures Development Expenses
Animal Other 20181 20181
Health €1.6 €5.2bn €5.6bn
€1.5
Consumer
Health
€5.5 €2.6bn €2.7bn
Pharma
Group €16.7
€39.6 €1.1bn
€0.3bn
Crop CAPEX R&D Pharma Consumer Crop Science Animal Health
Science Health
€14.3
Free Cash Flow from Continuing Operations in €bn Net Financial Debt in €bn1
6 40 35.7
5.0
4.7
3.8 4.0 30
4
20 17.5
2 2.9 11.8
2.2 10
1.9
1.6
3.6
0 0
2015 2016 2017 2018 2015 2016 2017 2018
FCF FCF net Dividend
1 As initially reported without restatements
7 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Group Targets – Value Creation from Strengthened Base
20181 Guidance 20192 Target 20222
Sales 39.6 ~46 ~52
FX and portfolio adjusted in €bn
EBITDA 9.5 ~12.2 ~16
before special items in €bn
Core EPS 5.94 ~6.8 ~10
in €
Free Cash Flow ~3-4 ~8
4.7
in €bn
Net Financial Debt ~363 ~26-28
35.7
in €bn
1 As reported
2 Guidance and Target not including portfolio measures and based on average monthly exchange rates from 2018
3 Including approx. €1.1bn lease liability due to IFRS16
8 /// Bayer Debt Investor Relations /// Status: February 27, 2019
Bayer Pursues Conservative Financial Policy…
Financing instruments
// Syndicated credit facilities
Key objectives
Ensure liquidity and
// Global Commercial Paper program
creditworthiness
Long term target of
investment grade rating in
single A category
// Multi-currency bonds
Sustained increase in
enterprise value
// Hybrid bonds
// Equity-linked instruments
Prudent debt management with excellent access to diverse sources of liquidity
9 /// Bayer Debt Investor Relations /// Status: February 27, 2019
… and Remains Committed to Rating in Single A Target Category
Development of Ratings and Leverage1
Schering2 Monsanto2,3
4.2x 4.5x
Merck OTC2
3.4x
~3.5x
2.9x
2.6x Proven track record of
2.4x
2.6x 2.1x
disciplined deleveraging
2.5x 1.9x 1.9x 1.9x
1.6x
1.1x
(Net Financial Debt + Pensions – 50% of Hybrid Volume) / reported EBITDA before special items
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
Agency Long Term Rating over time Agency LT-Rating Outlook ST-Rating
S&P A BBB+ A- BBB S&P BBB Stable A2
Moody’s A3 Baa1 Moody’s Baa1 Negative P2
Fitch3 BBB+ A- A A- Fitch4 A- Stable F2
1 Figures as reported in the respective year’s annual report without restatements; Guidance 2019 based on average monthly exchange rates from 2018 and Pensions flat at 2018 level
2 Ratios of years were closing of acquisition took place are not fully comparable as EBITDA before special items of acquired business is only considered for months after closing
3 Based on 2018 unaudited pro forma EBITDA of combined business as shown on Capital Markets Day in December 2018, multiple results in 3.7x instead of 4.5x
4 Solicited since 2018
10 /// Bayer Debt Investor Relations /// Status: February 27, 2019Bayer’s Maturity Profile is Well Balanced
Bond and Loan Maturity Profile1 (€bn) Currency Exposure incl. Derivatives2
as of February 27, 2019 as of December 31, 2018
Hybrid (first Call Dates) Mandatory Convertible Notes
7,000 Exchangeable Bond EUR Senior Bonds
JPY Private Placements USD RegS/144a Other
BRL
USD Term Loan JPY
6,000
EUR
5,000
4,000
€35.7bn
3,000
2,000
USD
1,000
0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >=2030
1 Converted at EURUSD 1.14 and EURJPY 126; MCN in 2019 only considered with interest portion
2 Based on 2018 year-end FX rates
11 /// Bayer Debt Investor Relations /// Status: February 27, 2019Overview of Bayer‘s Funding Structure
Net Financial Debt1 Nominal Volume of Mayor Instruments (bn)
Net Financial Debt1 as of December 31, 2018
Dec. 31, 2017 Sep. 30, 2018 Dec. 31, 2018 Senior EUR Bonds €6.3
€ million € million € million
1 RegS/144a USD Bonds $27.2
Bonds and notes / promissory notes 12,436 35,595 35,402
of which hybrid bonds2 4,533 4,536 4,537 JPY Private Placements ¥30.0
Liabilities to banks 534 7,040 4,865 2 Exchangeable Bond €1.0
Liabilities under finance leases 238 391 399
Liabilities from derivatives3 240 208 172 3 Hybrid EUR Bonds €4.6
Other financial liabilities 970 616 556
Receivables from derivatives3 (244) (195) (137) 4 USD Term Loan $4.9
Financial debt 14,174 43,655 41,257
Cash and cash equivalents (7,581) (4,850) (4,052) 5 Mandatory Convertible Notes6 €4.0
Current financial assets4 (2,998) (1,318) (930)
Noncurrent financial assets5 – (963) (596)
Net financial debt 3,595 36,524 35,679 6 Other Sources of Liquidity
1 For definition see Annual Report 2018, Chapter “Alternative Performance Measures Used by the Bayer Group.”
2 Classified as debt according to IFRS Syndicated Loan Facility €4.5
3 These include the market values of interest-rate and currency hedges of recorded transactions
4 These include short-term loans and receivables with maturities between 3 and 12 months outstanding from banks and other companies as well as Commercial Paper Program $8.0
financial investments in debt and equity instruments that were recorded as current on first-time recognition
5 These solely comprise the remaining interest in Covestro that is to be used to repay the convertible notes issued in 2017 that will mature in 2020.
6 MCN only considered with interest portion of 0.3bnUSD
12 /// Bayer Debt Investor Relations /// Status: February 27, 20191 Main Issuing Entities at Bayer Group
Bayer AG
Germany
Hybrid EUR
EB1
Bonds Bonds
Bayer US Finance LLC USD Bayer Holding Ltd. Bayer Capital Corp. B.V.
USA Bonds Japan Netherlands
Bayer US Finance II LLC JPY EUR
USD MCN2
Bonds Bonds
USA Bonds
Bayer Corp. USD
USA Bonds
Monsanto Company USD
USA Bonds
Instruments issued or
guaranteed by Bayer AG
Indirect Hold through other
entities
1 Exchangeable Bond
2 Mandatory Convertible Notes
13 /// Bayer Debt Investor Relations /// Status: February 27, 20192 Profile of €1bn Covestro Exchangeable Bond due 2020
€1,600 Conversion
Repayment at 100%
Price: €80.1094
Market Value of Shares
€1,400
Value (mEUR)
€1,200
Investor’s Upside
€1,000
€800
€600
€40 €50 €60 €70 €80 €90 €100 €110
Covestro Share Price at Maturity
Face value Exchange Price Reference Dividend Issuance Maturity Term Coupon
€1bn At Issuance: €80.9300 At Issuance: €1.4000 Jun 2017 Jun 2020 3 years 0.05%
After first Dividend Adjustment: €80.1094 After first Dividend Adjustment: €1.3858
Next Dividend Adjustment: April 2019 Next Dividend Adjustment: April 2019
Bayer has the flexibility to settle the bonds in cash, by delivery of Covestro shares or by a combination thereof1
1 Bayer can determine a specified proportion of 1%-150% of the Principal Amount / Exchange Price on the last day of the calculation period to fix the number of shares taken for repayment at 1% discount
14 /// Bayer Debt Investor Relations /// Status: February 27, 20193 Hybrid Bonds at Bayer
NC6 3% €1.75bn: NC10 3.75% €1.5bn: NC7.5 2.45% €1.3bn:
217.6 bps spread + 5Y Swap1 230 bps spread + 5Y Swap1 200.7 bps spread + 5Y Swap1
1st Step-up: +25bps 1st Step-up: +25bps 1st Step-up: +25bps
2nd Step-up: +75bps 2nd Step-up: +75bps 2nd Step-up: +75bps
2014 2015 2020 2022 2024 2027 2040 2042 2044 2074 2075
Issuance NC6 Maturity
Jul 1st Call Date Jul 1st Step-Up Jul 2nd Step-Up Jul Jul
€1.75bn NC6
14 NC6 20 Date NC61 24 Date NC6 40 75
3.0% yield €1.75bn
Issuance NC10 Maturity
Jul 1st Call Date Jul 1st Step-Up 2nd Step-Up Jul Jul
€1.5bn NC10
14 NC10 24 Date NC101 Date NC62 44 74
3.75% yield €1.5bn
Issuance NC7.5 Maturity
Apr 1st Call Date Oct 1st Step-up Oct 2st Step-up Oct Apr
€1.3 bn NC7.5
15 NC7.5 22 Date NC7.51 27 Date NC7.5 42 74
2.45% yield €1.3bn
1 Swap is reset every fifths year starting with the first call date
15 /// Bayer Debt Investor Relations /// Status: February 27, 20194 $56.9bn Monsanto Acquisition Loan Facilities
Transaction Value
at Closing Acquisition Facilities
$63bn $56.9bn
Net Debt
$6bn
Bridge Loan Tranche Final Initial Outstanding in $bn
Equity Value Maturity Amount Dec. 31 Feb. 27
$46.9bn in $bn 2018 2019
$57bn
Loan A1 Jun. 2019 39.9 - -
Loan A2 Jun. 2020 7.0 - -
Term Loan Loan B1 Jun. 2020 4.0 - -
$10bn Loan B2 Sep. 2021 6.0 4.9 3.8
16 /// Bayer Debt Investor Relations /// Status: February 27, 20195 Mechanics of €4bn Mandatory Convertible Notes
Face value Min. Conversion Price Max. Conversion Price Settlement Maturity Term Coupon
€4bn At Issuance: €90 (100%) At Issuance: €108 (120%) Nov 2016 Nov 2019 3 years 5.625%
After Adjustments for two Dividends and one After Adjustments for two Dividends and
Right Issue: €83.9921 one Right Issue: €100.7905
Next Dividend Adjustment: May 2019 Next Dividend Adjustment: May 2019
50
Number of Shares to deliver
47.6
45
(in million)
39.7
40
35
65 € 75 € 85 € 95 € 105 € 115 €
Bayer Share Price
Conversion at Conversion at market price: Conversion at
max. conversion ratio: €4bn min. conversion ratio:
47.6m shares for €4bn Share price 39.7m shares for €4bn
€83.9921 €100.7905
Graph shows situation at current conversion prices
17 /// Bayer Debt Investor Relations /// Status: February 27, 20196 Other Sources of Liquidity
Syndicated Loan Facility Commercial Paper Program
The multicurrency Syndicated Loan Facility can be used for general corporate Commercial Paper (CP) is a short-term unsecured debt instrument. CP are
purposes and is primarily a back-up line. Thus, it is not intended to be drawn in normally issued at a discount and redeemed at nominal value. The term of CP
the course of ordinary business. The participating banks form Bayer’s global generally lie between 1 and 364 days. Bayer’s CP program allows the
banking group. Last renewed in December 2018, the credit facility was self- company to issue in both the U.S. market (USCP) and the Euro market
arranged. (ECP). It is structured as a SEC regulation’s section 4(a)(2) program so that
there are no restrictions related to the use of proceeds.
Bayer AG, Germany Bayer AG, Germany
Borrower Issuer
Bayer Corporation, USA Bayer Corporation, USA
Total Amount €4.5bn, thereof €1.5bn/$1.5bn Swingline Guarantor Bayer AG
Signing December 2018 Total Amount $8bn or equivalent
Tenor 5Y + two 1Y extension options ECP: Bayerische Landesbank, Commerzbank AG,
Goldman Sachs Int., ING Bank N.V., The Royal
Syndicate Size 23 Banks Bank of Scotland plc
Dealer
USCP: Barclays Capital Inc., BNY Mellon Capital
Purpose General Corporate Purposes Markets LLC, Credit Suisse Securities (USA) LLC,
Goldman Sachs & Co.
ECP: The Bank of New York Mellon, London
Issue and
Branch
Paying Agent
USCP: Bank of America, N.A.
18 /// Bayer Debt Investor Relations /// Status: February 27, 2019Event Calendar 2019
Date Event/ Publication
Tuesday, February 26, 2019 Announcement of proposed dividend
Wednesday, February 27, 2019 Annual Report 2018
Thursday, April 25, 2019 Q1 2019 Quarterly Statement
Friday, April 26, 2019 Annual Stockholders’ Meeting
Thursday, May 2, 2019 Planned dividend payment day
Tuesday, July 30, 2019 Half-Year Report 2019
Wednesday, October 30, 2019 Q3 2019 Quarterly Statement
Please note that the event calendar might be subject to changes
19 /// Bayer Debt Investor Relations /// Status: February 27, 2019Contacts at Bayer
Dr. Sven Vorstius
Head of Capital Markets Building W 11
E-Mail: Sven.Vorstius@bayer.com D-51368 Leverkusen
Dr. Jürgen Beunink
Senior Manager Investor Relations Building W 11
E-Mail: Juergen.Beunink@bayer.com D-51368 Leverkusen
20 /// Bayer Debt Investor Relations /// Status: February 27, 2019You can also read
