BAYRY Bayer Aktiengesellschaft (PK)

By Nina Trentmann 

Bayer AG's program of asset sales and cost-cutting is one of the first big tasks for new finance chief Wolfgang Nickl as the drugs and chemicals giant battles a decline in investor confidence following its acquisition of Monsanto Co.

Leverkusen, Germany-based Bayer on Thursday announced it would cut 12,000 jobs -- around 10% of its 118,200 strong global workforce -- and dispose of its animal-health business, some consumer brands and a 60% stake in chemical park operator Currenta. Cost savings are forecast to amount to EUR2.6 billion ($3.0 billion) by 2022, Chief Executive Werner Baumann said during a call with journalists.

Mr. Nickl -- who took on the role of Chief Financial Officer on June 1 after a stint as CFO of ASML NV, a Dutch supplier of machines for making computer chips -- will be involved with executing the program and delivering synergies from the Monsanto transaction, according to analysts.

Bayer hopes to generate around EUR1.0 billion in annual cost savings through the integration of the U.S. pesticides maker, which it agreed to buy in September 2016.

"This is a big challenge for the CFO," said Markus Mayer, an analyst at Baader Bank AG. The tasks ahead for Mr. Nickl include finding potential buyers for unwanted assets, reducing costs and managing the integration of Monsanto, Mr. Mayer said.

Shares of Bayer have lost roughly a third of their value since Aug. 10, when a San Francisco jury verdict found a Monsanto weed killer responsible for a man's cancer. Bayer faced lawsuits from 9,300 plaintiffs at the end of the October, up from 8,700 at the end of August, and is increasingly under pressure to justify the benefits of the $63 billion transaction that was completed in early June.

Some of the cut: announced job cuts will affect corporate and support functions, business services and various country platforms, a Bayer spokesman said. The company on Thursday said it will cut 5,500 to 6,000 jobs in this area.

While the divestment and restructuring initiative is spearheaded by CEO Mr. Baumann, CFO Mr. Nickl will be key to its success, said Daniel Wendorff, an analyst at Commerzbank AG.

Debt reduction should be a priority for Mr. Nickl as he reshapes the 155-year old company, Mr. Wendorff added. Bayer has guided that its debt pile will total EUR36 billion at the end of the year, according to analysts at Jefferies International Ltd.

Bayer needs to pay off debt so that it can tap the capital markets to finance the acquisition of smaller and medium-size companies to boost its pharmaceuticals business, Mr. Wendorff said.

Mr. Wendorff said such transactions could be worth between EUR500 million and EUR5 billion.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

(END) Dow Jones Newswires

November 30, 2018 10:40 ET (15:40 GMT)

Bayer Aktiengesellschaft (PK) (USOTC:BAYRY)
Historical Stock Chart
From Mar 2024 to Apr 2024

Bayer Aktiengesellschaft (PK) (USOTC:BAYRY)
Historical Stock Chart
From Apr 2023 to Apr 2024