Support from major shareholder
Activist investor joins Bayer
1/9/2023 5:08 p.m
Bayer’s share price is far from previous highs. Many shareholders blame the Monsanto takeover and glyphosate lawsuits. With the entry of an investor, the topic of breaking up the group could come back to the table.
The Californian investment company Inclusive Capital Partners has joined Bayer. The company, which was founded by hedge fund veteran Jeffrey Ubben in 2020, has acquired a 0.83 percent stake in the Leverkusen-based agricultural and pharmaceutical group, as Inclusive Capital Partners announced in a voting rights announcement. This gave Bayer shares a boost: with a plus of more than four percent, they were the biggest winners in the leading index DAX. The share package from Inclusive Capital Partners is worth around 430 million euros. Bayer did not want to comment on the entry.
According to the Financial Times, the investment comes at a crucial time for Bayer. According to informants, the chemical and pharmaceutical company is looking for a new CEO to replace Werner Baumann, who will leave in 2024, the newspaper writes.
As the Financial Times reported, Ubben, who is known on Wall Street as a rather reticent activist investor, already has the backing of at least one of Bayer’s largest shareholders to push for changes at the company. “Ubben is someone we would definitely vote for if he were a candidate for Bayer’s board of directors,” the newspaper quoted David Herro, chief investment officer at Harris Associates. According to data from Refinitiv, this investment company is Bayer’s third-largest shareholder with almost three percent.
Share price halved since summer 2018
“Management hasn’t shown much willingness to change the status quo,” Herro said, noting that Bayer is trading at a discount to its competitors in each of its three businesses – pharmaceuticals, consumer healthcare and crop science. Bayer has always rejected recurring speculation about a split of the agricultural and pharmaceutical group: these did not increase the value of the business.
The Leverkusen group does not have to deal with an activist investor for the first time. In 2019, the hedge fund Elliott had built up a stake of around two percent and put pressure on the company in the wake of the wave of lawsuits over the alleged carcinogenic effects of the weed killer glyphosate in the USA.
Bayer had brought the lawsuits into the house with the $63 billion takeover of glyphosate developer Monsanto. The company itself is only worth a good 49 billion euros on the stock exchange. The group is still a long way from the former share price of over 100 euros in summer 2018, even though Bayer recently won six glyphosate lawsuits in a row.