Bayer Faces Demand for Breakup by Artisan Investor Amidst Concerns

26 Aug, 2023

Bayer, a multinational conglomerate (BAYGn.DE), finds itself in the crosshairs of significant change as Artisan Partners, a notable investor, asserts the need for substantial alterations.

The investor advocates for a "de-merging" of two out of the company's three business arms, adding their voice to a growing chorus of stakeholders demanding transformation.

Earlier in the year, activist entity Bluebell Capital Partners also sought a breakup, underlining the surge in demand for change. This sentiment was echoed by prominent investors, including Deka, a mutual funds group, which criticized the prior leadership. The notion of isolating the healthcare and agricultural sectors has been pitched as a straightforward remedy.

Artisan Partners' call intensifies the pressure on Bill Anderson, who assumed leadership in June, transitioning from Swiss counterpart Roche (ROG.S). Anderson shoulders the responsibility of revitalizing Bayer's share price, which has trailed competitors due to the enduring expenses related to U.S. weed killer litigation.

Artisan's proposal entails divesting the over-the-counter and pharmaceutical units. David Samra, Artisan's International Value team's founding portfolio manager, conveyed the sentiment, dubbing Bayer a "conglomerate" and outlining concerns about the conglomerate's myriad challenges, including excessive debt.

Anderson, acknowledging the multifaceted challenges, embarked on a comprehensive review of the company's strategy and structure. His commitment to exploring all avenues is resolute, a stance highlighted by his remark of "leaving no stone unturned". A preliminary update is slated for the near term, followed by detailed plans in early 2024.

Before taking the reins as CEO, Anderson expressed willingness to consider a breakup, though dissenting investors oppose this route. Artisan, positioned as Bayer's 16th largest investor per Refinitiv data, retains a stake of undisclosed magnitude.

In a bold move, Artisan recommended a dividend reduction to channel capital for operational efficiency and business reinvestment. This proposition reflects the evolving landscape in which Bayer finds itself, poised at the nexus of transformation and adaptation.

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