Coverage: Bayer to cut 12,000 jobs, sell animal health business
Bayer AG plans to cut 12,000 jobs and exit its animal health business in an effort to mollify Wall Street, which has punished the company over the tidal wave of lawsuits that came alongside the $63 billion takeover of Monsanto Co.
Tim Loh and Naomi Kresge of Bloomberg News had the story:
The German company announced a rash of moves, including exiting the sun-care and foot-care segments, that it said would boost its core pharma and agricultural businesses. The cuts, including a significant number in Germany — where layoffs are politically sensitive — represent about 10 percent of the workforce. The shares fell 2.3 percent as of 5 p.m. in Frankfurt trading, erasing initial gains after the announcement.
Bayer is under mounting pressure to prove that its new model makes sense. The Monsanto deal turned it into the world’s largest agricultural chemicals and seeds maker, with giant pharmaceutical and consumer health units under the same roof.
Investors remain unconvinced. The shares slumped after the acquisition was announced and closed, and Bayer’s market value has plunged some 30 billion euros ($34.1 billion) since August, when a California jury ruled against its signature weedkiller Roundup, saying it may have caused a school groundskeeper’s cancer. At least 9,000 other lawsuits are pending.
“Today’s decisions were not made necessary by the recent acquisition, and certainly not by glyphosate litigation in the U.S.,” Chief Executive Officer Werner Baumann said on a call with reporters, referring to Roundup’s chemical compound. “Absolutely nothing to do with it.”
Ruth Bender of The Wall Street Journal reported that Bayer will also sell its Coppertone and Dr. Scholl brands:
The job cuts equate to about 10% of Bayer’s 118,200-strong global workforce, and mark an effort to save costs as it faces problems across most its businesses, such as falling sales in over-the-counter drugs and a potential slowdown in prescription medicines.
The German company said it would sell its animal-health unit, which could fetch up to EUR7 billion ($8 billion), according to analysts. The company said it wants to invest the proceeds in its core businesses: pharmaceuticals, consumer health and crop science.
Bayer said it would also sell a 60% stake it owns in chemical park operator Currenta, which analysts say could fetch between EUR1 billion and EUR2 billion.
The job cuts and asset sales come as Bayer is under intense pressure from investors amid a wave of lawsuits over weedkillers it acquired as part of Monsanto.
Charles Riley of CNN Business reported that one third of the jobs cut will be in crop sciences:
The chemicals and pharmaceuticals group said it would cut 12,000 jobs out of its global workforce of 118,000 by the end of 2021. A significant number of the reductions will be made in its home market of Germany.
More than 4,000 jobs will go at the company’s crop sciences division, a consequence of Bayer’s acquisition of US rival Monsanto earlier this year.
Bayer spent over $60 billion buying Monsanto. To gain regulatory approval for the deal, Bayer agreed to sell assets including its seed business and some herbicide brands.
The German company said in a statement on Thursday that it was considering whether to sell more assets, including the sunscreen business Coppertone and footwear brand Dr. Scholl’s.