“The Bayer is burning brightly”
Investors are rubbing Bayer’s boss’s nose at the company’s misfortune
April 26, 2024, 5:44 p.m
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Bayer boss Anderson has been in office for a year and there is no end to the crisis mode in sight. The group ended 2023 with a loss of billions. The share price has halved. At the general meeting, some investors gave vent to their displeasure.
Bayer boss Bill Anderson faces criticism from investors at his first general meeting. Almost a year after he took office, the long-suffering shareholders were mostly disappointed; there was still no solution in sight for the problems of the crisis-ridden pharmaceutical and agricultural company. “Mr Anderson, you have not been able to build trust on the capital market in your first year,” complained Ingo Speich, Head of Sustainability and Corporate Governance at the investment company Deka, at the company’s virtual shareholder meeting. Anderson called for patience: There is no quick solution, but he wants to turn things around at Bayer.
When he took office, the former Roche pharmaceutical boss received advance praise. The expectations were high. The American has taken over to lead the Leverkusen-based company, which is facing a high mountain of debt and a loss of almost three billion euros last year, out of a deep crisis. His predecessor, Werner Baumann, brought Bayer into a never-ending legal dispute over the alleged carcinogenic effects of the weed killer with the billion-dollar takeover of the glyphosate developer Monsanto and lost a lot of trust.
Company value halved in one year
Janne Werning from Union Investment also expressed his displeasure: “While the DAX rose by 12 percent in the last 12 months, Bayer shareholders had to cope with a loss of 55 percent in value.” Before the Monsanto takeover was completed in 2018, Bayer was temporarily worth more than 100 billion euros. “Today it is around 26 billion euros – that is less than half as much as the purchase price that Bayer paid for Monsanto.”
Deka expert Speich announced that he did not want to relieve Bayer’s board of directors. According to Speich, the eagerly awaited Capital Markets Day in March, on which Anderson presented his strategy, did not produce any substantial new insights. The biggest challenges remain unsolved. “The Bayer house is ablaze and you, as the landlord, start cleaning up instead of putting out the fires,” said Speich. “We expect a much stronger focus on reducing legal risks, improving the pharmaceutical pipeline and a more robust agricultural business.”
The fund company DWS, on the other hand, came to the conclusion that Anderson had already provided important impetus. “We are aware that some of the effects of these measures will only occur with a delay,” said their representative Hendrik Schmidt. DWS wants to relieve the burden on the board of directors and supervisory board, as does the fund company Union Investment. The two influential proxy advisors ISS and Glass Lewis also recommended voting for discharge.
“Please get started”
The Bayer boss initially wants to concentrate on introducing a new organizational model that is intended to reduce bureaucracy and involves significant staff cuts at the expense of many managers. The dividend will be cut to a minimum for the next three years to reduce debt. Instead of 2.40 euros per share, the DAX group now only pays 0.11 euros.
At the Capital Markets Day, Anderson initially rejected a split of the group, which some investors had called for. But the board remains open to everything. In the next two to three years, however, the company will focus on building a strong pharmaceutical pipeline, reducing legal risks, reducing debt from a recent level of 34.5 billion euros and continuing to introduce the new organizational model. Anderson reiterated that Bayer was considering all options to end the legal disputes – but he did not become specific.
“The journey ahead will present challenges,” Anderson said. “But I am convinced that there is a way to turn things around at Bayer.” The shareholders are impatient, they have already spent a lot of time with problems, replied Marc Tüngler, general manager of the German Association for the Protection of Securities Ownership. “We’re dying for them to do something different, please get started.”