It took several years of investor pressure to oust Bayer CEO Werner Baumann. Last week the company revealed former Roche pharma chief Bill Anderson would replace Baumann, a year before his hitch was up.
Investors have started to speculate that under Anderson’s leadership, Bayer will be more open to follow an industry trend by separating its three business sectors—pharma, consumer health and crop science. It’s a move that Baumann held out against late in his tenure.
But not all interested parties are on board with a potential new direction at Bayer. German trade union IG Bergbau, Chemie, Energie (IGBCE) is resisting any major changes according to a report in left-leaning German newspaper Taz.
“From the point of view of the employees, Bayer with its three pillars is perfectly positioned for the challenges of the future,” Francesco Grioli, who sits on the executive board of IGBCE and the supervisory board at Bayer, told Taz.
With news of the CEO switch last week, Bayer’s shares increased by 5%. But since then, they have returned to pre-announcement levels.
Bayer’s board unanimously backed Anderson in a selection process that began several months ago, the company said. Chairman Norbert Winkeljohann lauded Anderson’s “outstanding track record of building strong product pipelines and turning biotech breakthroughs into products.”
Bayer could have relieved some of the investor pressure with an in-house choice. But according to Refinitiv’s Lipper Alpha Insight, the “narrow” selection of Anderson sets the scene for a breakup of the company.
“Given the new chief’s background, investors have good reason to prepare for a spinoff of the crop science division,” the investor news outlet wrote. “Putting a candidate with no agriculture background in charge suggests a spinoff of the seeds and pesticides division is in the cards.”
Many have speculated that the potential added value of the breakup of the company could be significant.
Investor pressure on Baumann has been acute since he orchestrated an ill-fated acquisition of Monsanto for $66 billion in 2018. The company brought weed-killer Roundup and a litigation headache that has mushroomed over the ensuing years and contributed to Bayer’s share slump.
Among the activist investors coming after Bayer have been Elliott Management, Bluebell Capital Partners and Union Investment. Most recently it was Inclusive Capital Partners’ Jeffrey Ubben bringing the heat after taking an .83% stake in the company.
“You can only manage the transformation of the industry with a corporate policy based on risk diversification and sustainability, not on hedge fund activism,” Grioli told Taz.