Bayer shares rose by almost four percent to 52.48 euros at the beginning of the week.
(Photo: dpa)
Dusseldorf Bayer AG has a new activist US investor: The Californian investment company Inclusive Capital Partners is taking a 0.83 percent stake in the Leverkusen-based company, according to a voting rights announcement on Monday. Behind the fund is American hedge fund veteran Jeffrey Ubben.
The Bayer share price then rose by 4.7 percent to EUR 53.05. The entry fuels the expectation on the stock exchange that pressure from the financial market will lead to a major restructuring at Bayer. Investors see the group, with its mixed model of pharmaceutical and agrochemical businesses, as a candidate for a split.
However, this is rejected by Bayer’s management and supervisory board. Whether hedge fund manager Ubben joins the split demands is open. He takes a different approach than Paul Singer, for example, with his Elliott fund, which, after investing in a company, usually exerts external pressure on the management of companies and thus moves the share price. Elliott also joined Bayer a few years ago, but it is unclear whether the fund is still involved in the group.
Ubben usually changes companies from the supervisory board
Ubben, on the other hand, prefers to move into company boards as an activist investor and initiate change from within. “My approach is to really work with management as part of the board, rather than both sides yelling at each other,” the investor said in an interview with the Kellogg Management School last year.
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Ecological and social goals that are much longer-term are the new value drivers. US investor Jeffrey Ubben
Ubben has not yet commented on what changes he could suggest at Bayer. However, the hedge fund manager has recently been pursuing special sustainability strategies. At the American oil company Exxon, where Ubben is a board member, he is driving the development of the so-called “carbon capture” business. This involves technologies for storing carbon dioxide so that it does not enter the earth’s atmosphere and thus fuel climate change.
ESG: The focus could be more on sustainability in the future
The pursuit of ESG goals to improve environmental protection, society and corporate governance may also have prompted him to join the agricultural equipment supplier and drug developer Bayer. “Ecological and social goals, which are much more long-term, are the new value drivers,” says Ubben. “That’s the part of the return I’m looking for.”
For some Bayer investors, Ubben is considered a beacon of hope: “Ubben is someone we would definitely vote for if he were up for election to Bayer’s supervisory board,” quotes the British “Financial Times” David Herro, the investment boss by Harris Associates. According to data from Refinitiv, the company is Bayer’s third-largest shareholder with almost three percent.
Bayer: The pressure on the corporate management is increasing
The pressure on the management of the Leverkusen group will increase. The entry of Inclusive Capital comes at a sensitive time, because Bayer is currently preparing the change at the top of the board. CEO Werner Baumann will leave his post in April 2024. His successor will be announced this year.
The new CEO will have to quickly enter into dialogue with the major Bayer shareholders. A few weeks ago, the sovereign wealth fund Temasek from Singapore stated that they were in “constructive dialogue” with Bayer’s supervisory board chairman regarding the “strategic focus and the general structure of the company”.
With three percent, Temasek is one of Bayer’s largest shareholders. “There is still a lot to be done, from our point of view we have only done about a third of the way,” said Temasek Europe boss Uwe Krüger to the Handelsblatt.
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