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Leverkusen, Germany
September 13, 2001
- Bayer plans to form separate
companies for health care and crop protection
- Acquisition of Aventis Cropscience soon to be finalized
- Expanded programs to improve profitability
- Rapid implementation of restructuring activities
Bayer AG will retain its
pharmaceutical activities as a core business. To this end, the
company plans to transfer its current Health Care business
segment into an independent corporate unit within the Bayer
Group. This plan of the Board of Management was approved by the
Supervisory Board at its meeting today. The planned acquisition
of the crop protection activities of Aventis CropScience
strengthens another, highly profitable core business, making
Bayer one of the world's leading crop protection and
biotechnology companies. For this activity, too, Bayer intends
to form an independent unit within the Group. Both projects will
be realized with due regard for the rights of the employee
representatives.
Immediately following the voluntary withdrawal of the
cholesterol-lowering drug Lipobay/Baycol, Bayer's Board of
Management announced that it would review its strategy for the
Health Care segment in light of the new situation and develop
alternatives if necessary. "We again gave a detailed
presentation to the Supervisory Board, of the reasons for our
action and explained our new
medium-term plans for the pharmaceuticals business," said
Management Board Chairman Dr. Manfred Schneider after the
meeting. "The Supervisory Board and the Board of Management
agree that, despite the major setback, these activities remain a
core business of the Bayer Group that can contribute
substantially to enhancing the company's value in the interest
of our stockholders and employees." The Board of Management, he
said, is convinced that a modified strategy is necessary to
achieve this.
The first step planned in this direction is the formation of a
separate corporate unit within the Group to achieve greater
flexibility for necessary strategic partnerships. "We have set a
new course," explained Schneider, "but we still need more time
to work out a detailed timetable."
Regarding the crop protection business, Bayer expects the
negotiations with Aventis and Schering on the acquisition of
Aventis CropScience to be successfully completed by the end of
September. Duly observing the rights of the employee committees
and subject to the approval of the antitrust authorities, it is
then planned to integrate the crop protection activities of both
companies into
a newly established company that will be a separate legal entity
within the Bayer Group. The new company will be one of the top
players in the global crop protection market, with approximately
23,000 employees and combined sales approaching EUR 7 billion.
The Board of Management and the Supervisory Board also agreed
that no structural changes are currently necessary for the
Polymers business segment because of Bayer's healthy competitive
stance in this area. For the Chemicals segment, however, action
is needed to strengthen the business for the future.
In addition to the organizational changes for the health care
and crop protection businesses, the Board of Management also
informed the Supervisory Board about significant restructuring
and earnings improvement measures for the Group. These include
the following:
- The cost-containment measures
already initiated are to be speeded up so that savings of
several hundred million euros can already be achieved in the
current year. This figure will increase to nearly EUR 1
billion in 2002 and reach up to EUR 1.8 billion a year from
2005. These measures include reducing the global work force by
another 4,000.
- Following the Lipobay/Baycol
withdrawal, extensive adjustments are necessary in the
Pharmaceuticals Business Group, including further staff
reductions.
- Investments in property, plant
and equipment are to be adjusted to the level of depreciation
and amortization.
- The service functions at the
various sites of Bayer AG will be combined into a new "Site
Services Division" to exploit major synergies. This new unit,
to be formed in January 2002 by merging the functions of the
current Site Services, Environmental Protection and Safety
Division with those of the Utilities and the Central
Maintenance and Construction sections of the Central
Technology Division, will employ about 7,000 people.
Schneider emphasized that the new
structure in no way represents a departure from the proven
four-pillar strategy. Bayer will retain Health Care,
Agriculture, Polymers and Chemicals as its core activities but
gain greater competitiveness and drive by organizing some of
these businesses differently. "We realize that we are expecting
a good deal of flexibility from our employees at this time, and
that this may not be easy for them. We will discuss the future
course of action with the employee representatives, take their
legitimate interests into account and jointly reach a solution.
But the modified organizational structure will give us the boost
from which the employees will also benefit," Schneider pointed
out. The Chairman assured the employee representatives and the
whole work force that they can rely on Bayer to follow its
proven philosophy of giving employee interests high priority in
all of its activities.
"Supervisory and Management Boards agree that we will succeed in
getting the company back on track," declared Schneider, pointing
out that economic performance is not the only important factor:
"It is also important for us to win back the confidence of our
customers, employees and stockholders and retain it for the
long-term. Bayer remains a first-rate company with a bright
future."
Company news release
N3797
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