November 8, 2023
By Eyk Henning and Tim Loh
Bayer AG’s new chief executive said he’s weighing a breakup of the pharma and agriculture conglomerate, a move that could undo much of the legacy of his predecessor, including the troubled acquisition of Monsanto.
Bill Anderson, who took over as CEO in June from Werner Baumann, said he may separate Bayer’s consumer-health or crop-science operations. Baumann rejected such a step, even after the $63 billion takeover of Monsanto turned sour and activist investors demanded action.
“We are redesigning Bayer to focus only on what’s essential for our mission, and getting rid of everything else,” Anderson said as the company reported disappointing third-quarter earnings. That will likely impact the workforce as well as the company’s structure, he said.
Credit: David Paul Morris/Bloomberg
“As hoped, Bill Anderson is turning over every stone at Bayer,” said Markus Manns, portfolio manager at Union Investment, a shareholder. “Simplifying the group structure would be an important step in making the company more attractive on the capital market. Spinning off consumer health would be the easiest way to generate value.”
Earnings plunged 31% to €1.69 billion ($1.80 billion) before interest, taxes, depreciation and amortization last quarter, falling short of estimates, hurt by falling prices for glyphosate, the active ingredient in its blockbuster weed killer Roundup. Bayer reiterated that sales and profit will likely fall this year and said it expects “a soft growth outlook and continued challenges” to profitability for next year.
The stock was little changed in Frankfurt trading. It has shed 20% in the past 12 months.
“We’re not happy with this year’s performance,” Anderson said. “Nearly 50 billion euros in revenue but zero cash flow is simply not acceptable.”
Bayer will remove multiple layers of management and coordination by the end of next year and elaborate on its future plans at an investor day in March, Anderson said.
Anderson joined as Bayer confronts a thicket of challenges on both the crop science and pharma fronts. His statements are the most tangible picture Bayer has ever offered about its openness for potentially breaking up the current business model.
Anderson considered and then ruled out a simultaneous three-way split, he said Wednesday.
Baumann survived repeated shareholder rebukes during his seven-year tenure as CEO before stepping down this year. A staunch defender of Bayer’s conglomerate approach, Baumann spearheaded the acquisition of Monsanto, which saddled Bayer with debt and massive legal headaches related to Roundup.
©2023 Bloomberg L.P.
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