Bayer to spin off polymers business

Bayer's MaterialScience group will be floated on the stock market as a separate company sometime in the next 18 months as the firm focuses on its HealthCare and CropScience units.

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Bayer (Leverkusen, Germany) announced on Sept. 18 that it intends to focus entirely on its Life Science businesses – HealthCare and CropScience – and float MaterialScience on the stock market as a separate company. In this way Bayer is positioning itself as a world­leading company in the field of human, animal and plant health.

The Supervisory Board unanimously approved the Board of Management's plans on Sept. 18. “Our intention is to create two top global corporations: Bayer as a world­class innovation company in the Life Science businesses, and MaterialScience as a leading player in polymers,” says Bayer CEO Dr. Marijn Dekkers. He said both companies have excellent prospects for success in their respective industries. Employment levels are expected to remain stable over the next few years, both globally and in Germany.

In recent years, Bayer's center of gravity has greatly shifted toward its Life Science activities with the successful launch of novel pharmaceutical products, the pending acquisition of the over­-the-­counter products business of Merck & Co. Inc. and the very successful development of the CropScience business. The aim is to continue the positive development of these activities in the future through further investment in growth. The Life Sciences currently already account for about 70 percent of Bayer's sales and 88 percent of EBITDA before special items.

It is planned to float the MaterialScience business on the stock market as a separate company within the next 12 to 18 months. A major reason for this move is to give MaterialScience direct access to capital for its future development. This access can no longer be adequately ensured within the Bayer Group due to the substantial investment needs of the Life Science businesses for both organic and external growth. Also, as a separate company, MaterialScience can align its organizational and process structures and corporate culture entirely toward its own industrial environment and business model.

“We firmly believe that MaterialScience will use its separate status to deploy its existing strength even more rapidly, effectively and flexibly in the global competitive arena,” Dekkers says. A strategy and corporate culture aligned to technological and cost leadership, coupled with the ability to make its own investment and portfolio decisions, would give MaterialScience the best development prospects in a highly competitive market. That, said Dekkers, includes direct capital market access so that it would not have to compete with the Life Science businesses for investment funding in the future.

“MaterialScience is a very well positioned business that today operates very modern, competitive, large­scale facilities. We have steadily invested in these facilities, even in difficult economic times,” Dekkers points out, citing the world­scale production facilities in Shanghai, China, and the new TDI plant in Dormagen, Germany, which is to be officially inaugurated in December.

As a stand-alone firm, MaterialScience will be Europe's fourth ­largest chemical company; it had global sales in 2013 of more than €11 billion (pro forma figure). The new company is planned to have a global workforce of roughly 16,800, including about 6,500 in Germany. It will have a new name and a separate identity and be headquartered in Leverkusen.