Bayer has announced the sale of one of its chemicals business, H C Starck, in order to raise money for its 17 billion-euro acquisition of German drugmaker Schering AG.

The company said in March that it was planning to sell Starck and its Wolf Walsrode unit, which makes cellulose used in building materials, by the end of this year.

Starck supplies metal and ceramic powders used in the electronics, aerospace and automotive industries, amongst others, and the sale will raise 1.2 billion euros towards the Schering acquisition. It has been bought by a consortium of US private equity investors, including the Carlyle Group and Advent International, who say they plan to take the unit public in the next few years.

Bayer said the transaction value comprises a cash component of more than 700 million and the assumption of financial liabilities and personnel-related commitments totalling some 450 million euros.

The divestment will reduce Bayer’s net debt by about billion euros and provide an accounting gain of about 150 million euros, said Bayer. It is expected to close early next year.

Healthcare has been positioned as the primary growth engine for Bayer once the deal goes through, with Bayer-Schering Pharma’s focus on specialty areas such as oncology – one of the fastest-growing sectors of the drug market at present – providing the fuel.

Bayer already owns about 95% of Schering, and chairman Werner Wenning said earlier this week the company is going to seek shareholder approval of a squeeze-out of the remaining equity.