The Bayer AG corporate logo is displayed on a building of the German drug and chemicals company in Berlin, Germany, Monday, May 23, 2016. (AP Photo/Markus Schreiber)
FRANKFURT 鈥 Bayer鈥檚 new CEO plans to cut management jobs to speed up decision-making as a first step to overhaul the embattled German industrial group, which is facing investor pressure to break up, three people familiar with the matter said.
Bill Anderson, at the helm since June, is keen to show investors speedy improvements and buy himself time to lay out broader restructuring plans over the next few months, the sources said. They declined to be identified because the details are confidential.
Anderson plans to soon present initial plans for cutbacks at an internal strategy meeting, one of the sources said, while another said the measures would affect middle-to-upper layers of management, resulting in as yet unspecified one-off costs for golden handshakes for departing employees.
The number of jobs affected, and timing of an announcement are not known.
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A Bayer spokesperson declined to comment.
鈥淎 sense of urgency is evident in the new CEO. The old management often acted as if they had all the time in the world,鈥 said Markus Manns, portfolio manager at German mutual fund firm Union Investment, when asked to comment on the Reuters report.
He noted that Anderson had shown a clear distaste for bureaucratic structures at his previous employer, Roche.
鈥淎nderson seems set to not leave any stone unturned at Bayer. Carrying on as before is simply not an option,鈥 he added.
鈥淏ayer is facing investor pressure to break up, so the news might improve sentiment, but it isn鈥檛 the news the market is waiting for,鈥 said one stock trader, who declined to be identified.
Anderson told analysts after the release of second-quarter results that too much red tape 鈥 alongside the company鈥檚 debts and lawsuits related to weedkiller Roundup and chemicals known as PCBs 鈥 meant the company was missing out on opportunities. Bayer acquired the legal liabilities associated with Roundup and PCBs when it acquired Creve Coeur-based Monsanto for $66 billion in 2018, a deal that has since been derided by some Bayer investors as 鈥渄isastrous.鈥
鈥淭he litigation overhang, the corporate bureaucracy, debt levels, these all weigh on our ability to focus on the mission,鈥 he said in August.
He added at the time that he will change from annual to 90-day budgeting cycles and let teams of people close to customers make business decisions, rather than a layer of management above them.
Market concerns
Among the people leaving the maker of drugs and pesticides under the overhaul, for which the CEO has hired consultancy firm McKinsey, is head of group strategy Oliver Kohlhaas, who will not be replaced, two of the sources said.
Kohlhaas and McKinsey declined to comment.
Anderson鈥檚 appointment was widely welcomed by shareholders as a qualified CEO pick to overhaul Bayer, replacing predecessor Werner Baumann, who had drawn criticism for not being responsive to capital market concerns.
But the new CEO will likely have only a short respite period to come up with concrete strategic proposals. Investor Artisan Partners told Reuters last month the company needs to separate its three main businesses 鈥 agriculture, prescription drugs and consumer health products.
Activist Bluebell Capital Partners called for a breakup earlier this year. Other top investors, including mutual funds group Deka, had railed against the company鈥檚 previous leadership. Some have said an easy fix would be to separate the health care and agricultural businesses.
Anderson has been tasked with reviving Bayer鈥檚 share price, which has underperformed rivals, weighed down by the lingering costs of U.S. weedkiller litigation.
Anderson said last month he was not ruling out any options as part of his review of the company鈥檚 strategy and structure, saying he was 鈥渓eaving no stone unturned.鈥
He added he would provide an initial update in the coming months and detailed plans in early 2024.
The company said in an unscheduled statement last month that it was projecting a steeper fall in earnings and zero free cash flow, in what some analysts suggested was Anderson seeking to get bad news out quickly to allow for a fresh start.
The Post-Dispatch contributed to this report.
