The group has halved its stock market value since the Monsanto takeover.
(Photo: dpa)
Dusseldorf In the new year, Bayer AG is increasingly being targeted by activist investors. The London hedge fund Bluebell Capital has now also joined the Leverkusen team, reports the Bloomberg news agency, citing financial market insiders. Bluebell has already informed the Bayer management that the fund requires a split of the Leverkusen.
It was announced on Monday that the American investor Inclusive Capital had acquired a stake in Bayer AG and was pushing for changes. Hedge fund veteran Jeffrey Ubben acquired 0.8 percent of the group through the company.
How many shares Bluebell owns is not known. The London activist is known for only buying very small shares, but for publicly and vehemently stating his position. According to the circles, Bluebell not only demands the split into a pharmaceutical and an agrochemical company, but also a change at the top of the supervisory board.
The entry of Inclusive Capital helped the Bayer share price to rise by 4.8 percent. The report on Bluebell came Tuesday after the market closed. Bayer is constantly criticized by investors because of its low valuation. Since the $63.5 billion acquisition of Monsanto in 2018, the stock price has halved.
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Bayer declined to comment on the fund’s entry. In general, one is ready for constructive discussions with all shareholders, it said. It is not known whether the chairman of the supervisory board, Norbert Winkeljohann, is in contact with the new activist investors.
Pressure on management before the general meeting is increasing
The coming months could be very uncomfortable for the Bayer leadership. At the end of April, shareholders are invited to the Annual General Meeting. Bluebell Capital is known for its nagging criticism and is seen as an aggressive investor that likes to team up with other funds.
In 2021, the Londoners managed to force the then CEO of the French consumer goods manufacturer Danone out of office within a very short time and to install their own representative on the board of directors.
Overall, however, the track record is mixed. Bluebell failed last year at the Swiss luxury goods group Richemont (“Cartier”). There, the investor wanted to turn the board of directors inside out and force a change in the board of directors and the renaming to Cartier Group.
However, none of the demands found a majority at the Richemont Annual General Meeting in September 2022. At the end of last year, Bluebell took on the world’s largest wealth manager Blackrock and demanded that its CEO Larry Fink be dismissed – so far without success. Allegedly, Bluebell only holds 0.01 percent of Blackrock.
Bayer is in the middle of looking for a new CEO
Now Bayer is in sight. Several factors ensure that the Leverkusen group is now the target of hedge funds. Bayer is in the middle of the search for a successor for CEO Werner Baumann, who will be leaving in May 2024. Baumann has always spoken out vehemently against a split and knows that the management and the supervisory board have his back.
The activist fund calculates that the demands of individual investors could be heard more by his successor, especially if the top position is not filled by an internal candidate. According to company circles, Bayer is examining internal and external managers for the successor.
Inclusive Capital boss Ubben has already made it clear to the “Financial Times” that he would prefer a new Bayer boss coming from outside. He was more reluctant to comment on a possible split. In his view, an “ultimate split” is not necessary to create value. Nevertheless, Bayer must reconsider its structure and examine spin-offs.
The pain reliever is the best-known product from Bayer’s Consumer Health division.
(Photo: dpa)
He should mean a separation of the third Bayer division Consumer Health with over-the-counter medicines (“Aspirin”). According to earlier information, Consumer Health also consider German fund companies such as Union Investment to be an “interesting spin-off candidate”. Bluebell Capital also mentions this in the list of demands to Bayer.
Such mind games among investors are increasing because the Leverkusen-based group has made little progress in terms of stock market valuation for years – despite good business and great progress in solving the glyphosate legal disputes in the USA. Bayer currently has a market capitalization of around 50 billion euros, at the beginning of 2018 it was more than twice as much.
The persistently low valuation is also criticized by the Singaporean sovereign wealth fund Temasek, which, with a good four percent, is Bayer’s largest shareholder after Blackrock.
In an interview with the Handelsblatt, Temasek’s European boss Uwe Krüger said that the company was in “constructive dialogue” with Bayer’s supervisory board chairman regarding the “strategic focus and general structure of the company”. There is still a lot to do: “In our view, only about a third of the way is done.”
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