Staffers Informed as Bayer AG Starts Life Science Reorg; Eyes New Corporate Structure by 2016

Staffers Informed as Bayer AG Starts Life Science Reorg; Eyes New Corporate Structure by 2016
February 12, 2015
By Mark Terry, Breaking News Staff

Germany-based Bayer AG sent a letter to employees Wednesday announcing it would begin restructuring as it prepared to sell its MaterialScience plastics unit.

Bayer has three main business divisions, HealthCare, CropScience and MaterialScience. By unloading its MaterialScience division, it will focus on life sciences. “We will be a pure life sciences company and must organize ourselves as such,” said Bayer spokesman Guenter Forneck in a statement.

The MaterialScience unit has a value of about $11.7 billion, but the company plans to focus on the more profitable pharmaceuticals and life science divisions.

In October 2014 Bayer acquired Merck & Co. ’s over-the-counter drug business, which included prescription rights for Claritin and Afrin. The deal closed for about $14.2 billion total.

Details about the sale of the MaterialScience unit are still pending. Initial indications are that it will be sold on the stock market. However, Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich, suspects it could also be a spinoff or multi-part sale instead.

“It’s a necessary step,” said Wenner in a statement. “This will result in a more efficient and leaner organization to make things work more quickly.”

Other sources indicate that Bayer is considering selling its diabetes device business.

The organizational plans are not completely new. In the company’s third quarter report it wrote, “The strong upward trend in our Life Science businesses—HealthCare and CropScience—persisted. We saw robust sales growth for our recently launched pharmaceutical products and in our CropScience business in North and Latin America.”

It went on to say, “In addition, we set the course for the Bayer Group to focus entirely on the Life Science businesses—HealthCare and CropScience. It is planned to float MaterialScience on the stock market as a separate company by mid-2016 at the latest in order to give MaterialScience direct access to the capital markets for the continuing development of its business.”

The company has indicated that it is not planning job cuts. The recent letter stated, “We expect the number of jobs to be stable worldwide and in Germany over the next few years.”

Bayer Group employs approximately 113,200 people worldwide, with 35,300 of them in Germany. The MaterialScience division manufactures and sells high-tech polymers and itself has three sub-business units, polyurethanes, polycarbonates, and coatings, adhesives and specialties. The MaterialScience division employs 14,300 people.

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