Activist investor ramps up pressure on incoming Bayer boss
Bluebell Capital Partners calls for conglomerate’s break-up and boardroom reshuffle ahead of AGM
Activist investor Bluebell Capital Partners is pushing for the break-up of Bayer and a supervisory board reshuffle, increasing the pressure on the incoming chief executive one week ahead of the conglomerate’s annual shareholder meeting.
In a presentation sent to Bayer earlier this week, the small activist investor, which says it holds an undisclosed stake, welcomed Bayer’s appointment of Bill Anderson, former head of Roche’s pharmaceutical business, who will formally become chief executive in June.
But Bluebell said Bayer needs to go further, committing now to ensuring that the four supervisory board members whose term expires next year will not seek re-election. It argues that this would send a “strong signal of discontinuity” for the underperforming company, which should be split into its crop science and pharmaceutical divisions.
The investor’s intervention comes at a critical moment for Bayer as chief executive Werner Baumann will leave the company next month. Shares in Bayer have risen by more than 20 per cent this year but are still trading more than a third lower than they were five years ago.
Chief executive-elect Anderson acknowledged this month that the group was facing “unique challenges”, saying that he would consider all options including a potential break-up to address Bayer’s issues. However, he stressed that a split is not a foregone conclusion.
Baumann is resigning a year early after persistent investor pressure over the ill-fated Monsanto takeover that included a vote of no confidence in management in 2019. Bayer shares have underperformed because of billions in litigation costs from its 2016 acquisition of US agrichemical group Monsanto.
Bluebell argued in its presentation that there are “no synergies” between the two divisions and estimated that a separation could generate about €15bn to €30bn, which it suggested should be used to pay down debt and reinvest in pharmaceuticals. It added that the company should explore monetising its consumer health division, which sells over-the-counter medicines.
Marco Taricco, founding partner of Bluebell, said he has heard from other shareholders with similar concerns.
“If you appoint a new chief executive when the supervisory board is the same monolith, they don’t want to do anything, then the CEO is not going to have an easy job,” he told the Financial Times.
Jeff Ubben, managing partner of Inclusive Capital Partners and founder of the hedge fund ValueAct Capital, has also taken a stake in Bayer to lobby for change, including raising questions about whether the company should be split into two groups.
Bluebell said its stake in Bayer is the biggest it holds but did not disclose its size. The small activist fund, launched in 2019, made waves when it was instrumental in the removal of the chief executive of the French yoghurt maker Danone. It also lobbied for change at UK drugmaker GSK, but did not succeed in changing the company’s management.
Bayer said it was aware of Bluebell’s letter and presentation and was “always open for a constructive dialogue”, adding that Anderson was currently familiarising himself with the company and, together with the team, would discuss priorities for the future.