GERMANY —Bayer’s newly appointed CEO, Bill Anderson, is planning a strategic overhaul that begins with trimming down management positions to expedite decision-making in a bold move aimed at rejuvenating the embattled German industrial giant.
This initiative comes in response to mounting pressure from investors demanding a major restructuring within the company.
The stock market has already shown signs of approval, with Bayer’s stock surging by 1.3% on the announcement, outperforming Germany’s benchmark index DAX and the STOXX Europe 600 Health Care index.
Anderson, who assumed his role in June, is determined to demonstrate swift improvements to shareholders while crafting comprehensive restructuring plans for the months ahead.
Anderson is gearing up to present initial cutback plans at an internal strategy meeting in the near future, targeting middle-to-upper layers of management.
These changes are expected to involve one-off costs associated with severance packages for departing employees, though the exact number of affected jobs and the timing of the announcement remain undisclosed.
Bayer, keeping its cards close to the chest, has refrained from commenting on these developments.
A sense of urgency
Markus Manns, a portfolio manager at German mutual fund firm Union Investment, commented on Anderson’s proactive approach, saying, “A sense of urgency is evident in the new CEO.
The old management often acted as if they had all the time in the world.” Manns highlighted Anderson’s aversion to bureaucratic structures, as evidenced during his tenure at Roche, stating, “Anderson seems set to not leave any stone unturned at Bayer. Carrying on as before is simply not an option.”
While the news of Bayer’s management shake-up has been met with cautious optimism, some market insiders remain skeptical.
One anonymous stock trader remarked, “Bayer is facing investor pressure to break up, so the news might improve sentiment, but it isn’t the news the market is waiting for.”
Addressing critical issues
Anderson’s decision to restructure Bayer is motivated by several pressing concerns. He has cited excessive red tape, the company’s debt, and ongoing litigation related to weedkiller Roundup and PCB chemicals as impediments to the company’s growth.
In his own words, Anderson noted, “The litigation overhang, the corporate bureaucracy, debt levels, these all weigh on our ability to focus on the mission.”
In a bid to revamp Bayer’s operations, Anderson plans to shift from annual to 90-day budgeting cycles. He also intends to empower teams closer to customers to make crucial business decisions, bypassing layers of management.
As part of the restructuring process, Anderson has enlisted the services of consultancy firm McKinsey.
Some notable departures include head of group strategy Oliver Kohlhaas, who will not be replaced, according to insider sources. Both Kohlhaas and McKinsey have declined to comment.
Pressure from investors
Anderson’s appointment was welcomed by shareholders as a step toward addressing long-standing issues within Bayer.
However, he faces mounting pressure from investors, including Artisan Partners and Bluebell Capital Partners, who have advocated for separating the company’s core businesses, such as agriculture, prescription drugs, and consumer health products.
Bill Anderson’s primary task as Bayer’s CEO is to revitalize the company’s stock performance, which has lagged behind its competitors due to ongoing legal costs related to the U.S. weedkiller litigation.
Anderson has pledged to explore all available options as part of his comprehensive review of the company’s strategy and structure, with an initial update expected in the coming months and detailed plans set to be unveiled in early 2024.
In a surprising move, Bayer released an unscheduled statement last month projecting a steeper fall in earnings and zero free cash flow.
Analysts suspect that this announcement was aimed at preemptively addressing bad news, clearing the way for a fresh start under Anderson’s leadership.