Bayer Plans Focus on Life Sciences; Spin Out of Material Science Business

Bayer announced that it intends in to focus entirely on its life-sciences businesses, HealthCare and CropScience, and float its material science on the stock market as a separate company. Bayer’s supervisory board unanimously approved the board of management’s plans.

“Our intention is to create two top global corporations: Bayer as a world-class innovation company in the Life Science businesses, and MaterialScience as a leading player in polymers,” said Bayer CEO Dr. Marijn Dekkers in a company statement. Employment levels are expected to remain stable over the next few years, both globally and in Germany, according to Bayer.

In making the move, Bayer is emphasizing its recent activity in the life-sciences market, with the successful launch of novel pharmaceutical products, the pending acquisition of the over-the-counter products business of Merck & Co., Inc., and development of its CropScience business. The company’s life-sciences businesses currently account for about 70% of Bayer’s sales and 88% of EBITDA (earnings before interest, taxes, depreciation, and amortization) before special items. The companies of the future Bayer Group had pro forma sales of approximately EUR 29 billion ($37 billon) in 2013. They will employ nearly 99,000 people, including about 29,500 in Germany. Corporate headquarters will remain in Leverkusen, Germany.

“Bayer will continue as an enterprise with an attractive and balanced portfolio and a primary focus on organic growth,” Dekkers explained. To this end, the company intends to raise its research and development spending, selectively strengthen early research at the interface between HealthCare and CropScience, and continue driving the successful commercialization of recently launched pharmaceutical products. Bayer expects several products, the anticoagulant Xarelt, the eye medicine Eylea, the cancer drugs Stivarga, and Xofigo, and the pulmonary hypertension drug Adempas, to have a combined peak annual sales potential of at least EUR 7.5 billion ($9.6 billion).

Bayer plans to float the MaterialScience business on the stock market as a separate company within the next 12 to 18 months. “A major reason for this move is to give MaterialScience direct access to capital for its future development. This access can no longer be adequately ensured within the Bayer Group due to the substantial investment needs of the Life Science businesses for both organic and external growth. Also, as a separate company, MaterialScience can align its organizational and process structures and corporate culture entirely toward its own industrial environment and business model,” said Bayer in its statement.

Following the intended flotation, MaterialScience will be Europe’s fourth-largest chemical company; it had global sales in 2013 of more than EUR 11 billion ($14 billion) (pro forma figure). The new company is planned to have a global workforce of roughly 16,800, including about 6,500 in Germany. It will have a new name and a separate identity and be headquartered in Leverkusen.

Source: Bayer

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