`New' Bayer Group Will be More Flexible to Boost
Competitiveness and Performance
Bayer Stock to be Listed on the New York Stock Exchange on January 24 -
Corporate Reorganization Proceeding Apace
NEW YORK, Jan. 22 /PRNewswire/ -- Bayer takes its place on the New York
Stock Exchange with a clear blueprint for a new corporate structure. At an
international news conference held in New York on Tuesday prior to the listing
of Bayer's stock on January 24, 2002, CEO Dr. Manfred Schneider commented that
he expects the formation of a management holding company with four independent
operating subsidiaries to give the group the flexibility it needs to achieve
greater agility in its markets and boost its international competitiveness.
Speaking at the news conference, CEO Dr. Schneider and Bayer CFO Werner
Wenning reported that the company is in a process of rapid change following
the announcement of the reorganization plans at the end of last year.
"We have initiated far reaching change processes which will lead to
increased competitiveness, more flexibility and a better overall performance
in all our businesses," explained Schneider. Preparations for implementing
the new structure, which is also designed to facilitate strategic
partnerships, are already well under way. The plans also include streamlining
the portfolio by divesting subsidiaries and affiliates whose activities are
considered non-core. The new legal structure is to be introduced on
January 1, 2003. "We are convinced that our four new companies will prosper
and establish top positions in their markets," said Schneider.
The New York Stock Exchange represents the `Who's Who' of global industry,
Schneider noted, declaring: "Our stock belongs here." The U.S. listing
provides Bayer with a range of benefits and opportunities, including direct
access to the U.S. capital market. It also means that Bayer can use its stock
as an acquisition currency in the future. At present, U.S. investors hold
about 8 percent of the capital stock, and the company wishes to broaden its
stockholder base in the United States. "We are now more attractive to some
institutions here that can only purchase shares of foreign companies which are
listed in the U.S.," explained Schneider. The listing on Wall Street will
also give Bayer the opportunity to launch stock ownership programs for its
U.S. employees.
Health Care company in strong position
The new organizational structure will comprise of four operating companies
under the umbrella of a management holding company. The euro 11 billion-plus
Health Care business, consisting of the Pharmaceuticals, Biologicals, Consumer
Care, Diagnostics and Animal Health business groups, is to be developed into
one of the leading companies in its field. To gain critical mass and round
out the portfolio, Bayer is looking for strategic partners -- whether for the
entire health care business or for individual business units and special
markets. However, Schneider stressed that Bayer intends to remain "in the
driver's seat." The company's health care activities, in particular, are much
stronger and more valuable than is generally realized at the present time.
While Bayer already has the necessary expertise and resources for a leading
position in the global health care market, partnerships could speed up the new
company's development.
To boost the efficiency of pharmaceutical research and development, the
search for new active substances has already been placed on a broader footing.
Instead of establishing and maintaining large-scale capacities for these
highly specialized processes, Bayer has assembled a network of external
partnerships and alliances. "This research platform provides us with best-of-
class technology," Bayer's CEO explained. "We access know-how through long-
term alliances with leading biotechnology and high-tech companies such as
Millennium Pharmaceuticals, Lion Bioscience and CuraGen. Our goal is to
identify at least 20 new development projects per year and to rapidly leverage
this high output into new pharmaceutical products." The development pipeline
currently contains 14 more substances in phase I and II clinical trials and
24 substances undergoing preclinical tests -- for such indications as cancer,
cardiovascular disorders and infectious diseases. The number of ongoing
preclinical projects has increased more than five-fold since 1995.
A global leader in Crop Science
Bayer is making rapid progress with the planned acquisition of Aventis
CropScience. The euro 7.25 billion acquisition -- pending regulatory approval
-- will be the largest in Bayer's history. "The two businesses had combined
sales of almost euro 7 billion in 2001, and the new company will be a world
leader in the agrochemicals industry." The antitrust authorities are expected
to complete their review of this transaction by the end of the first quarter
of 2002. Bayer CropScience -- as the new company will be called -- aims to
increase sales to euro 8 billion a year by 2005 and is targeting a 20 percent
operating margin.
Schneider reported that the four Polymers business groups -- Plastics,
Polyurethanes, Rubber, and Coatings and Colorants -- would be combined to
create one of the world's largest polymers companies with sales of more than
euro 11 billion. He pointed out that in many of these businesses, Bayer is
already the market leader. "In other businesses, too, we have reached top
positions," he said. "Our goal is not only to maintain our leading position
but to gain further market share." Although Bayer is continuing its active
portfolio management even after the acquisition of the Lyondell polyols
business and Sybron, it is now strong enough to grow organically in the
future.
The new euro 4 billion-plus Chemicals company to be created from the Basic
and Fine Chemicals and Specialty Products business groups will target a 12 to
13 percent operating margin. It aims to become one of the world's leading
specialty chemicals producers. In the face of the ongoing consolidation in
the global chemicals market, Bayer is prepared to enter into a partnership for
this business that could lead to a joint venture with a similarly structured
company. Schneider: "Our medium-term goal is to forge a strategic alliance to
gain enhanced technological expertise, expanded marketing operations and
strengthened presence in the world's major economic regions, especially in the
United States."
Wenning: "Biggest reorganization in Bayer's history"
CFO Werner Wenning, who succeeds Schneider as CEO at the end of April this
year, described the planned changes in the company's corporate structure as
the biggest reorganization in Bayer's history: "The change process we have
initiated is far-reaching, and it is being implemented at full speed." The
establishment of four independent operating companies has three goals: to
create a more agile Bayer Group, to increase the focus on key success factors
and to enhance transparency. "Focused, balanced and timely decisions will
give us a competitive edge," he said. The new operating units will therefore
have the mandate and flexibility to act quickly, resulting in accelerated
portfolio and technology development, faster identification of market
opportunities and faster response to customer demand.
"A declared objective of our new structure is more transparency," said
Wenning. "The result is value: We -- and our shareholders and the analysts --
will be able to judge even better Bayer's drivers of success -- and thus what
belongs, and what does not." Much has already been accomplished in this
direction. Almost half of the product line has been restructured through
acquisitions and divestitures over the past five years. Only recently Bayer
announced the divestment of three companies with annual sales totaling euro
1.4 billion. Wenning commented that he is confident that all of these
divestments can be completed during 2002.
At the helm of the new structure will be the holding company's management
board. It will determine overall strategy, decide on the portfolio of
businesses, control the allocation of resources and nominate the top managers
of the operating companies. Its most important aim will be to achieve a
sustained increase in Bayer's value. Wenning explained that positioning four
operating units under the umbrella of a management holding company would serve
to maximize market potential, and therefore value, by creating a sound basis
for sustained growth.
Schneider and Wenning expressed their confidence that the stockholders
will give the plans an unconditional go-ahead at the Annual Stockholders'
Meeting in April and that the new structure can be in place by January 1,
2003.
Leverkusen, January 22, 2002
hhb (2002-01-023-E)
Contact:
Hans Graf von Hochberg, phone + 49 214 30 82895
E-mail: hans.hochberg.hh@bayer-ag.de
In New York:
Gunter Forneck, phone + 49 175 30 50446
Forward-Looking Statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties and other factors could lead to substantial
differences between the actual future results, financial situation,
development or performance of the company and the estimates given here. The
company assumes no liability whatsoever to update these forward-looking
statements or to conform them to future events or developments.
SOURCE Bayer Corporation
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Related links:
http://www.bayerus.com
Company News On-Call:
http://www.prnewswire.com/gh/cnoc/comp/092575.html
CONTACT:
Hans Graf von Hochberg of Bayer, + 49 214 30
82895, or hans.hochberg.hh@bayer-ag.de; or (in New York): Gunter
Forneck, + 49 175 30 50446, for Bayer
NOTE TO EDITORS: The texts of the speeches by Dr. Manfred
Schneider and Werner Wenning, including charts, can be found on
the Bayer homepage at http://www.bayer.com. They are also available by
fax via our service line (+ 49 214 30 55522). Photos of the news
conference will be available on the Bayer homepage
(www.bayer.com) starting at about 5.30 p.m. Central European
Time.
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