By Neetha Mahadevan

FRANKFURT--Bayer AG (BAYN.XE) said Tuesday it remains committed to its animal health unit and its struggling materials science division, even as it invests billions to acquire Merck & Co. Inc.'s (MRK) consumer care business to bolster its presence in over-the-counter pharmaceuticals.

"We have a good animal health business and we would like to get bigger and stronger," Chief Executive Marijn Dekkers said in a conference call. Earlier Tuesday, Bayer announced a $14.2 billion deal to buy Merck's consumer care operations and entered a drug cooperation with the U.S. company.

Mr. Dekkers said he is closely observing developments in the animal health industry, after Eli Lilly struck a deal to acquire Novartis AG's animal-health business for $5.4 billion last month, making Lilly the second-biggest animal-health company by global revenue, behind Zoetis Inc.

With heightened M&A activity in the pharmaceutical industry, there has been speculation that Bayer's material sciences division could be sold to allow the company to focus on health care. Several analysts had expected that the company could sell the plastics and chemicals business, which is worth an estimated 7.8 billion euros ($10.8 billion), to fund a deal with Merck.

However, Bayer has dismissed the speculation. Mr. Dekkers said Bayer is funding the deal exclusively with debt and doesn't need to raise capital. The company plans to fund the acquisition through a consortium of banks and then largely refinance through the issuance of senior and hybrid debt.

Write to Neetha Mahadevan at neetha.mahadevan@wsj.com

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