Dusseldorf Norbert Winkeljohann, Chairman of the Bayer Supervisory Board, could hardly have paid the outgoing CEO any more respect: “Dear Mr. Bayer,” he called to Werner Baumann at the beginning of the Annual General Meeting on Friday. The slip of the tongue in Winkeljohann’s acceptance speech is no coincidence: Baumann worked for the Leverkusen Dax group for 35 years and has been CEO since 2016. The 60-year-old will retire at the end of May.
There were fewer words of thanks from investors. Ingo Speich from the fund company Deka spoke of “lost years for Bayer” and the “Millstone Monsanto” with a view to Baumann’s tenure. He alluded to the billions in legal costs that the purchase of the US seed manufacturer brought with it. Others, however, held back with criticism.
All eyes of Bayer shareholders are on the successor – and what he will do or should do from their point of view. Bill Anderson is the future CEO of Bayer. The 56-year-old American also showed at the Annual General Meeting that he was introducing a cultural change in the group: the standard white shirt under the dark jacket was missing, Anderson wore a loose shirt as usual and came across as rather sporty. He greeted the shareholders in German, spoke of anticipation and continued in English.
“I’m a scientist at heart and dedicated to lifelong learning in biotechnology,” said Anderson. The potential at Bayer is huge, but that alone is not enough. “We must keep our promise to help make the world a better place with successful products.” With that, Anderson concluded his brief introduction.
The new CEO cannot be more specific. The investors, on the other hand, do. In view of the weak performance of Bayer stock, Speich said there could be no “business as usual”. He sees it as one of Anderson’s main tasks to regain confidence in the capital market. “Otherwise, far-reaching demands from the shareholders against the board of directors and the supervisory board will flare up.”
The 56-year-old American will take over as CEO on June 1st.
(Photo: Reuters)
What is meant by this are demands for a split of the Bayer Group and its mixed structure of agricultural and pharmaceutical businesses. They come mainly from activist investors who see it as the best way to increase value. The hedge fund Bluebell Capital made another appearance in Leverkusen before the general meeting with demands for a change of strategy.
However, other large Bayer shareholders do not follow such advances.
“The time is ripe for a new beginning,” said Janne Werning from the fund company Union Investment. “However, for us and many long-term investors, a break-up is not an option at this point in time. That would be harmful for employees and for Germany as an industrial location.”
Bayer should remain “a piece of home”.
Marc Tüngler, general manager of the German Association for the Protection of Securities, does not support the split demands. Bayer has potential to create more value in other ways, he said. Tüngler thinks it’s wrong to harass Anderson now. “We want a strong CEO. He should be able to take enough time for his strategy.”
By the beginning of 2024 at the latest, many investors are expecting Anderson to make a clear statement on how Bayer should continue in terms of structure and content. The new boss has already made it clear that splits, spin-offs or major acquisitions are not his primary approach. On the other hand, it is also clear to him that the pressure will increase if Bayer does not succeed in increasing its value quickly on the stock exchange.
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A dissection of the company would meet with bitter resistance from the workers. Bayer’s head of the general works council, Heike Hausfeld, said at the annual general meeting that she was looking forward to the new CEO’s impetus. However, Bayer should continue to offer its employees “a piece of home” – just as it has always been.
When asked, CEO Baumann underlined that they were not dealing with an IPO of the agricultural division and a spin-off associated with it. He emphasized the “value” of the joint Bayer brand. Technological trends such as the opportunities offered by digitization in biotechnology also speak in favor of keeping the pharmaceutical and agricultural businesses under one roof.
Demands for spin-off of aspirin business
Investors like Union see a spin-off of the Consumer Health division as a suitable opportunity to create value for shareholders. The smallest Bayer division combines the business with non-prescription medicines related to aspirin. Analysts estimate the value of the division at 15 to 20 billion euros. Bayer is currently worth a total of 58 billion euros.
The pressure to take such a step is likely to increase. Most other pharmaceutical companies have already taken the OTC business public as independent companies. The American Johnson & Johnson is currently driving such a spin-off. The success of this should be closely followed by investors and Bayer management.
Baumann is unchanged behind the takeover of Monsanto, which he engineered in 2016 at the beginning of his tenure. “From a strategic point of view, it was and is the right step. The legal risks have certainly weighed heavily on the financial rationale,” he said.
Baumann: Monsanto purchase was the right step
What is meant are the billions in charges due to the glyphosate lawsuits in the USA. Shareholders are hoping that Anderson can put an end to this burden. Bayer has a plan for this. However, it is neither clear nor foreseeable which further options are available.
Baumann was also not satisfied with the performance of the share. However, Bayer is today “on a very strong and robust foundation”. He thinks his successor is the perfect choice. “He has an impressive track record as an innovation-oriented executive and business developer – and he is a convincing leader.”
Anderson will lead Bayer into a new, successful chapter, said Baumann. “I am very confident that this excellent company has its best days ahead.”
More: Bayer board receives bonus despite high glyphosate costs – shareholders criticize.