Acquisition of Aventis Cropscience Soon to be Finalized / Expanded Programs To
Improve Profitability / Rapid Implementation of Restructuring Activities
LEVERKUSEN, Sept. 13 /PRNewswire/ -- Bayer AG will retain its
pharmaceutical activities as a core business. To this end, the company plans
to transfer its current Health Care business segment into an independent
corporate unit within the Bayer Group. This plan of the Board of Management
was approved by the Supervisory Board at its meeting today. The planned
acquisition of the crop protection activities of Aventis CropScience
strengthens another, highly profitable core business, making Bayer one of the
world's leading crop protection and biotechnology companies. For this
activity, too, Bayer intends to form an independent unit within the Group.
Both projects will be realized with due regard for the rights of the employee
representatives.
Immediately following the voluntary withdrawal of the cholesterol-lowering
drug Lipobay/Baycol, Bayer's Board of Management announced that it would
review its strategy for the Health Care segment in light of the new situation
and develop alternatives if necessary. "We again gave a detailed presentation
to the Supervisory Board, of the reasons for our action and explained our new
medium-term plans for the pharmaceuticals business," said Management Board
Chairman Dr. Manfred Schneider after the meeting. "The Supervisory Board and
the Board of Management agree that, despite the major setback, these
activities remain a core business of the Bayer Group that can contribute
substantially to enhancing the company's value in the interest of our
stockholders and employees." The Board of Management, he said, is convinced
that a modified strategy is necessary to achieve this.
The first step planned in this direction is the formation of a separate
corporate unit within the Group to achieve greater flexibility for necessary
strategic partnerships. "We have set a new course," explained Schneider, "but
we still need more time to work out a detailed timetable."
Regarding the crop protection business, Bayer expects the negotiations
with Aventis and Schering on the acquisition of Aventis CropScience to be
successfully completed by the end of September. Duly observing the rights of
the employee committees and subject to the approval of the antitrust
authorities, it is then planned to integrate the crop protection activities of
both companies into a newly established company that will be a separate legal
entity within the Bayer Group. The new company will be one of the top players
in the global crop protection market, with approximately 23,000 employees and
combined sales approaching EUR 7 billion.
The Board of Management and the Supervisory Board also agreed that no
structural changes are currently necessary for the Polymers business segment
because of Bayer's healthy competitive stance in this area. For the Chemicals
segment, however, action is needed to strengthen the business for the future.
In addition to the organizational changes for the health care and crop
protection businesses, the Board of Management also informed the Supervisory
Board about significant restructuring and earnings improvement measures for
the Group. These include the following:
-- The cost-containment measures already initiated are to be speeded up so
that savings of several hundred million euros can already be achieved
in the current year. This figure will increase to nearly EUR 1 billion
in 2002 and reach up to EUR 1.8 billion a year from 2005. These
measures include reducing the global work force by another 4,000.
-- Following the Lipobay/Baycol withdrawal, extensive adjustments are
necessary in the Pharmaceuticals Business Group, including further
staff reductions.
-- Investments in property, plant and equipment are to be adjusted to the
level of depreciation and amortization.
-- The service functions at the various sites of Bayer AG will be combined
into a new "Site Services Division" to exploit major synergies. This
new unit, to be formed in January 2002 by merging the functions of the
current Site Services, Environmental Protection and Safety Division
with those of the Utilities and the Central Maintenance and
Construction sections of the Central Technology Division, will employ
about 7,000 people.
Schneider emphasized that the new structure in no way represents a
departure from the proven four-pillar strategy. Bayer will retain Health Care,
Agriculture, Polymers and Chemicals as its core activities but gain greater
competitiveness and drive by organizing some of these businesses differently.
"We realize that we are expecting a good deal of flexibility from our
employees at this time, and that this may not be easy for them. We will
discuss the future course of action with the employee representatives, take
their legitimate interests into account and jointly reach a solution. But the
modified organizational structure will give us the boost from which the
employees will also benefit," Schneider pointed out. The Chairman assured the
employee representatives and the whole work force that they can rely on Bayer
to follow its proven philosophy of giving employee interests high priority in
all of its activities.
"Supervisory and Management Boards agree that we will succeed in getting
the company back on track," declared Schneider, pointing out that economic
performance is not the only important factor: "It is also important for us to
win back the confidence of our customers, employees and stockholders and
retain it for the long-term. Bayer remains a first-rate company with a bright
future."
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:
Gunter Forneck, + 49 214 30 50446, or
guenter.forneck.gf@bayer-ag.de, or Hans Van Hochberg + 49 214 30
82895, both of Bayer
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