Bayer Won’t Be Splitting Up

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Bayer will remain Bayer, at least for the time being.

The company’s CEO, Bill Anderson, announced that despite earlier reports, Bayer will not be splitting up. The executive stated while speaking to investors on Tuesday, March 5, that while the company had considered its structure, this is not the time for such a major move, Yahoo Finance reports.¹

During the conversation, the CEO cited four areas of Bayer’s business that are causing too many issues to make structural changes possible at the moment. These areas are litigation, debt, bureaucracy, and the research pipeline. He also attributed Bayer’s loss of patent protection as being part of the decision. Anderson described each of these areas as broken parts of the company’s business.

Yahoo Finance reports that one area of litigation that is causing Bayer considerable issues are claims that Monsanto sold products that made people sick.

According to the report, Anderson said, ““In short, on the question of structure, our answer is ‘not now’—and this shouldn’t be misunderstood as never.” Of course, we will keep an open mind. We’ll always do that. But our priority is on tackling our challenges, boosting performance, and creating strategic flexibility. We are convinced that this approach is what’s best for Bayer.”

Bayer also issued a press release² detailing its plans for the coming year and how it plans to address these areas in the coming year. According to the release, Bayer plans to “regain strategic flexibility by 2026.”

Anderson also discussed possible sales of the company, stating that the only division that would be a consideration for at the moment is the company’s consumer health business. However, Anderson did not say that there were any offers being considered and also discussed multiple ways that this sale would not be as beneficial to the company as some may believe it would be.

Part of the company’s plan to improve performance is to implement a new operating model known as Dynamic Shared Ownership. This will reduce hierarchy levels and reduce bureaucracy, while also streamlining structures and accelerating decision-making. This is expected to reduce Bayer’s organizational costs by about $2 billion euros by 2026.

In January of 2023, Bayer faced calls to break-up its business from activist investors. Such demands from Bluebell Capital Partners caused shares to climb in mid-January, Reuters reports.³ The activist investor firm reportedly wanted Bayer to sell its consumer health unit. It also discussed plans to eventually break off the company’s pharmaceutical and agricultural businesses.

Bluebell reportedly invested in Bayer several months prior to the end of 2023.

Other activist investor groups, such as Inclusive Captial Partners and Elliott Management, also own significant shares of Bayer. Elliott has reportedly not made any major demands of the company.

Bayer’s previous CEO, Werner Bauman, had faced calls to be replaced by Bluebell. Bauman had spearheaded Bayer’s takeover of Monsanto, which is credited as playing a significant role in reducing the company’s market stake. Since taking over the agricultural company, Bayer’s market share has reduced by 40%.

Bauman left his role as CEO in early 2024 at the end of his second term and he was replaced by current CEO Bill Anderson.

Sources

1. Bell, Jacob. Bayer Isn't Splitting Up, For Now. Yahoo Finance. March 5, 2024. https://finance.yahoo.com/news/bayer-isn-t-splitting-now-114200814.html?guccounter=1
2. Bayer Aims to Enhance Performance and Regain Strategic Flexibility by 2026–Adjusted Guidance for 2023 Achieved. Bayer. March 5, 2024. https://www.bayer.com/media/en-us/bayer-aims-to-enhance-performance-and-regain-strategic-flexibility-by-2026--adjusted-guidance-for-2023-achieved/
3. Ludwing, Burger; Weiss, Patricia. Bayer Shares Gain as Another Activist Investor Piles In. Reuters. January 11, 2023. Accessed March 6, 2024. https://www.reuters.com/markets/deals/bayer-shares-up-22-after-report-activist-bluebell-pushing-break-up-2023-01-11/