Company has angered some shareholders with its plan to put breakup on hold while focusing on internal restructuring
FRANKFURT, Germany (Reuters) — Major Bayer shareholder Harris Associates has come out in strong support of the drug maker’s decision to suspend work on breaking up the diversified group, giving breathing room to its embattled chief executive officer.
The endorsement takes some pressure off CEO Bill Anderson, who had earlier 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-chair of one of Bayer’s top three shareholders.
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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 have been dubious about whether enough is being done to revive Bayer’s fortunes.
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 in 2018.
These include U.S. litigation alleging harm from 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.
Bayer said 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.
Herro also welcomed Bayer’s nomination 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 are biotechnology expert Nancy Simonian and former McKesson general counsel Lori Schechter.
All three are “very strong individuals who will help the company move forward in a positive fashion,” said Herro.
