Bayer chief picks contentious path for growth with Monsanto bid
Share price fall highlights scale of Werner Baumann’s gamble
Less than one month into his tenure as chief executive of Bayer, Werner Baumann has made a move that could end up defining his career.
The aspirin-to-weed-killer conglomerate this week confirmed it had approached the US group Monsanto about a potential takeover that analysts say could be worth more than $50bn. If consummated, that would make it the biggest foreign acquisition by a German company, outstripping the $38.6bn paid when Daimler-Benz acquired Chrysler in 1998.
Mr Baumann, a 53-year-old trained economist who has been with Bayer for almost three decades, appears to have concluded that, after recent deals between rivals Dow Chemical and DuPont and Syngenta and ChemChina, the German group must join the consolidation game or risk being left behind.
However, the 8 per cent fall in Bayer’s shares after its approach was made public highlights the scale of his gamble. Investors fear that buying Monsanto would strain finances and divert attention and resources from the pharmaceuticals business, which is also in need of investment.
“We have struggled to find investors who favour this transaction,” says Alistair Campbell, analyst at Berenberg. “We think a bid for Monsanto will be expensive, [earnings] dilutive and destroy value.”
Mr Baumann’s decision to set out on such a contentious path within weeks of taking over may have surprised those who expected a return to a more conservative and consensual German management style after six years of upheaval under his Dutch predecessor, Marijn Dekkers.
Yet, Mr Baumann was a close ally of Mr Dekkers in the streamlining of Bayer into a more focused life sciences group, based on the twin pillars of healthcare and agricultural seeds and chemicals. He was instrumental, first as chief financial officer and later as head of strategy, in the $14.2bn acquisition of consumer health assets from Merck of the US in 2014 and the spin-off of Bayer’s Covestro plastics unit last year.
Mr Baumann grew up in the small town of Krefeld, western Germany, where Covestro has a large plant beside the river Rhine. An allergy to flour dust deterred him from his family’s bakery business. Instead, he became the first of his family to go to university, studying economics, first in Aachen, then Cologne. He joined Bayer in 1988 and has never left.
Mr Baumann initially thought that by taking a job at Bayer, rather than joining one of the auditing firms that tried to woo him, he would be able to finish a doctorate he was working on in his spare time. But as he steadily rose up the company’s ranks, the thesis was quietly shelved.
A details-oriented workaholic, with distinctive short hair and round wire-framed glasses, he began in the finance department of Bayer’s Leverkusen headquarters. He was spotted by Werner Wenning, a rising star who himself led Bayer for eight years and is now chairman of its supervisory board.
Mr Baumann worked as Mr Wenning’s assistant when he was head of Bayer’s Spanish business. He was later sent to Bayer’s US diagnostics business, and then helped to rebuild the pharma division after a safety scandal led to the withdrawal of its Lipobay anti-cholesterol treatment.
After his stints abroad, he, his wife and four children returned to live in Krefeld. In his garage is the Vespa Rally he used to deliver medicines on as a part-time job while at school — a coincidental harbinger of his future career. The scooter stands, polished and restored, alongside a vintage Golf GTI and an expensive bicycle.
Mr Baumann joked in a recent interview that his new job left little time for cycling. “I might as well put [the bike] on eBay,” he said.
The pressure is unlikely to ease up as he battles to keep his Monsanto pursuit on the road.