Impregnable? Today, break-up plans are making the rounds again ; the Bayer bulwark is crumbling. This time, no competitors are attacking, but international investors. Many are upset that the company's stock has lost around half its value since the Monsanto takeover and the associated glyphosate lawsuits in the United States . Others see the opportunity to buy Bayer securities cheaply today - and to increase the value of the group with a lot of pressure on the board of directors and the supervisory board: At the beginning of January, the activist US funds Inclusive Capital and Bluebell Capital got into Bayer, which is exactly such pursue business model.
The demands for a breath of fresh air at the top of Bayer, for the separation of businesses or even for the splitting up of the agricultural and pharmaceutical group are becoming increasingly important.
The relationship between the Bayer leadership and most of the investors has been shattered for years. But while previously only a few soloists among the fund managers attacked the corporate management, a chorus of critics has now formed, in which prominent shareholders such as Temasek from Singapore or the US fund Elliott also join in. "The pressure from investors is increasing enormously, Bayer will have to change," says Markus Manns, portfolio manager at Union Investment, one of Bayer's largest shareholders with a stake of over one percent. The group's three-tier structure – agriculture (crop protection products, seeds), pharmaceuticals (prescription medicines) and consumer health (over-the-counter medicines) – is considered by many investors to be outdated.
Above all, there are two central demands that many investors support and make together. First, they want to have a say in the search for the next CEO. They prefer an external occupation. In this way, drastic changes can be implemented better. The first names are already circulating. Acting CEO Werner Baumann will retire by spring 2024 at the latest. Second: The board of directors and the supervisory board should examine the spin-off of the business with over-the-counter medicines. The classic aspirin and many other preparations would then disappear from the Bayer portfolio. Investors complain that the chairman of the supervisory board, Norbert Winkeljohann, has shown little initiative on both counts.
Poorly protected
Third, whether there is a majority among the shareholders in favor of breaking up Bayer is an open question. It is unclear, for example, how large shareholders such as BlackRock (about seven percent) or Goldman Sachs (five percent) position themselves. The supporters point to Siemens or Daimler, which have been broken down into their component parts and thereby created more value for their shareholders. According to the credo, managers act more successfully when they can concentrate on clearly defined businesses. The Bayer Board of Management and the Supervisory Board reject such requests - and rely on risk diversification. Also with reference to alleged synergies between agriculture and pharmaceuticals, which are doubted by many independent experts.
Also read:What does a split of Bayer bring?
Incidentally, Bayer has already spun off its chemical activities in two tranches; Lanxess (2004) and Covestro (2015) operate as independent companies. Bayer later separated from smaller units such as animal health. There is no protective major shareholder who could stand up to Bayer; the papers are scattered widely. In addition to BlackRock and Goldman Sachs , the Singapore sovereign wealth fund Temasek (more than three percent)is one of the largest shareholdersGerman funds such as Deka, DWS or Union Investment are also among the larger ones. Inclusive capital comes to 0.8 percent; Bluebell's share is unknown.
