Exclusive-Major Bayer shareholder Harris backs CEO's focus on internal restructuring
Reuters
Published Mar 07, 2024 13:16
Updated Mar 07, 2024 22:01
By Ludwig Burger
FRANKFURT (Reuters) -Major Bayer (ETR:BAYGN) shareholder Harris Associates on Thursday came out in strong support of the drugmaker's decision to suspend work on breaking up the diversified group, giving some breathing room to its embattled CEO.
The endorsement buoyed Bayer's shares, taking some pressure off Chief Executive Bill Anderson, who on Tuesday said he will pause for up to three years considerations to break apart the group to focus on problems including debt and litigation.
"Bill Anderson is absolutely taking the right path to enhance value creation at Bayer which will benefit all of Bayer’s stakeholders," said David Herro, vice chairman of one of Bayer's top three shareholders.
In a written response to a Reuters request for comment, Herro said the CEO was rightly focusing on efforts to "turn three very good businesses into great businesses".
Once this is accomplished, options in terms of corporate structure could be considered, he said.
Investors were dubious about whether enough is being done to revive Bayer's fortunes and the shares plunged 8.5% on Tuesday after Anderson's comments.
Following Harris Associates' endorsement, Bayer shares pared earlier losses of as much as 6% on Thursday to trade 1.3% lower at 1515 GMT.
Anderson, who was hired last year to turn Bayer around, previously said he was examining options to separate, spin off or sell businesses. Reuters reported last month that no such action was on the cards for now with the CEO facing a multitude of problems, mostly stemming from the $63 billion takeover of Monsanto (NYSE:MON) in 2018.
These include U.S. litigation alleging harm from weed-killer glyphosate and other chemicals, weak agriculture markets and pressure from some investors to spin off or sell businesses.
While a development setback for Bayer's most promising experimental medicine late last year has further depressed the stock, the U.S. lawsuits have weighed the most. Bayer lost about two thirds of its value since the Monsanto takeover.
"Everything and anything possible must be done to minimize litigation payouts," Herro said on Thursday.
Bayer said this week it would vigorously defend itself against litigation, and also look for solutions "outside the courtroom". Anderson has declined to disclose details, saying this could give plaintiff lawyers an advantage.
Bayer won a case last week but its track record in court has been spotty. The company reached settlements for up to $9.6 billion in 2020 but failed to win approval for a proposal to handle future claims. It currently has $6.3 billion in provisions for more glyphosate payouts.
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Herro also welcomed Bayer's nomination last week of three new supervisory board members, to be voted on at the April 26 annual shareholder meeting, which include Jeffrey Ubben, one of Wall Street's most prominent activist investors.
The other two were biotechnology expert Nancy Simonian and former McKesson General Counsel Lori Schechter.
All there are "very strong individuals who will help the company move forward in a positive fashion," said Herro.
Written By: Reuters
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