Summary
Companies
New CEO considers separating consumer or agriculture unit
Staggered three-way split is also an option
Q3 operating profit falls more than expected
Bayer says 2024 profitability faces challenges
CEO to cut management jobs, confirms Reuters report
FRANKFURT, Nov 8 (Reuters) - Bayer (BAYGn.DE) is considering breaking apart from its consumer health or crop science divisions, it said on Wednesday, as new CEO Bill Anderson gave his initial thoughts on how to revive the diversified German company’s battered share price.
Management is looking into separating either the non-prescription medicines business or the agriculture business from the rest of the group which includes pharmaceuticals, but not at the same time, Bayer said in a statement.
A sequential split into three companies is also an option, as is keeping all three divisions, said Anderson.
Initial public share offerings or spin-offs without raising cash were among the options, he said in a media call, but added further details would be withheld until a capital markets day next March.
“We are not wedded to one structure. We will pursue the best course to ensure maximum value creation,” the CEO said, adding that all members of Bayer’s supervisory board backed the review.
The German maker of medicines, seeds and crop chemicals also unveiled plans to remove several layers of management to accelerate decision-making, resulting in a “significant reduction” in the workforce, confirming a Reuters report from September.
Anderson said that 12 layers of management between him and customers were “simply too much”.
Bayer shares were down 1% at 1110 GMT, after rising as much as 1.2% in early trade as analysts weighed up the company’s cautious guidance on business in 2024 against the prospect of an organisational turnaround.
Bayer said that it expects a “soft growth outlook and continued challenges” to profitability next year. It also expressed confidence in its 2023 financial guidance but said a strong fourth quarter was needed.
“A separation of Consumer Health would be the easiest way to generate value. For Bayer it would mean following an industry trend,” said Markus Manns, a fund manager at Union Investment.
Major drugmakers Johnson & Johnson (JNJ.N) and partners GSK (GSK.L) and Pfizer (PFE.N) split off consumer products units this year and last. Sanofi (SASY.PA) last month mapped out a likely separate listing of its consumer healthcare business.
Bayer’s agriculture, prescription drugs and consumer health care units accounted for about 50%, 38% and 12% of 2022 group sales, respectively.
Anderson, who joined from Swiss drugmaker Roche (ROG.S) and took the helm in June, is under pressure to boost shares that have underperformed those of peers, prompting investors to call for various forms of a break-up.
He has previously pledged to leave “no stone unturned” in his review of the 160-year-old German group and inventor of aspirin.
His appointment was widely welcomed by shareholders after predecessor Werner…
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