Bayer investor Artisan calls for break up

Artisan Partners Asset Management

25/08/2023 17:37

(Adds comment from Artisan in paragraphs 7 to 9)
    By Richa Naidu
       LONDON, Aug 25 (Reuters) - Bayer  BAYGn.DE  is a
"conglomerate" that needs to make major changes including
"de-merging" two of its three business arms, investor Artisan
Partners told Reuters on Friday.
    Artisan wants the drugs to-pesticides company to demerge its
over-the-counter and pharmaceutical units, it said.
    "Recently we wrote a letter to the conglomerate Bayer -- and
it is a conglomerate," David Samra, founding portfolio manager
of Artisan's International Value team, said in an interview.
    Bayer has a "whole host of problems" including "too much
debt," Samra said. 
    Bayer's new CEO Bill Anderson said this month he is not
ruling out any options as part of his ongoing review of the
diversified company’s strategy and structure.
        Before taking the top job in June, Anderson said he was
keeping an open mind on whether to break up the company into
smaller pieces, as some investors have demanded, saying other
investors opposed the idea.
  
    Artisan is Bayer's sixteenth biggest investor, according to
Refinitiv data.
    We suggested "that they cut the dividend to zero because
they need the capital to effectively operate and reinvest back
in their business," Samra said, adding that the letter was sent
prior to Bayer's earnings results announcement on August 8.
    "Then in their earnings release, the company specifically
came out and said they're committed to their dividend which is
the exact opposite of what they should be doing in the long term
best interest of their business."
        Bayer declined to comment.
        Samra said that though the chairman of Bayer's
supervisory board has not directly written a letter back to
Artisan, they have "been in contact."
  
        Samra said Artisan "has not suggested specifically how
(Bayer) should restructure their business" in the letter. 
  
        The company is made up of "one properly scaled" business
that has "long-term advantages", while it's over-the-counter
pharmaceuticals and pharmaceuticals units are "sub-scale",
low-margin and "probably more valuable in the hands of somebody
else," he said in the interview.
  

 (Reporting by Richa Naidu; Additional reporting by Ludwig
Burger; Editing by Matt Scuffham)
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