Bayer’s (BAYGn.DE) planned surgery risks leaving an ailing rump. The 40 billion euro seeds-to-drugs maker on Wednesday unveiled a plan to either split off its consumer business, which makes Bepanthen diaper cream, or its crop science business, which is still plagued by lawsuits from Americans who say Bayer’s Roundup weedkiller gave them cancer. The plan, which would safeguard the pharmaceutical business, is part of new CEO Bill Anderson’s drive to revive a share price which has nearly halved since before the pandemic.
The maths for breaking up the business certainly stack up. Valued in line with peers, Bayer’s seeds, drugs and consumer units could be worth 54 billion euros, 38 billion euros and 16 billion euros respectively, according to Breakingviews calculations using LSEG data. Take off debt and pensions, and Bayer’s equity should total nearly 60 billion euros, some 47% above its current market capitalisation.
But hiving off the seeds business would leave a pharma business hitched to a consumer unit, a model shunned by rivals Pfizer (PFE.N), Sanofi (SASY.PA) and GSK (GSK.L). But if Anderson spins off the consumer division, he would still be left with drugs and seeds operations that don’t fit well together. To reap the benefits of a breakup, Anderson should embrace a three-way split. (By Aimee Donnellan)
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
Follow @Breakingviews on X
Capital Calls – More concise insights on global finance:
SEC may have to let crypto foxes into the henhouse read more
UK fashion retailer can revive discount price tag read more
Starbucks pays little mind to unions’ pay push read more
Paramount summits a precarious streaming peak read more
Maersk’s woes signal slow-motion industry crash read more
