Bayer has confirmed it is to float its MaterialsScience business to focus on its Life Sciences operations.
Industry speculation has been rife for months that the chemicals giant would divest the division in order to broaden its drug and crop science offerings.
"In this way Bayer would position itself as a world-leading company in the field of human, animal and plant health," the company said in a statement.
Bayer’s supervisory board has unanimously approved the Board of Management's plans today (Thursday).
"Our intention is to create two top global corporations: Bayer as a world-class innovation company in the Life Science businesses, and MaterialScience as a leading player in polymers," Bayer CEO Dr. Marijn Dekkers announced. He said both companies have excellent prospects for success in their respective industries.
Employment levels, says the company, are expected to remain stable over the next few years, both globally and in Germany.
Bayer intends 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, access that 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, the company said.
"Bayer will continue as an enterprise with an attractive and balanced portfolio and a primary focus on organic growth," Dekkers explained. To this end, the company intends to raise its research and development spending, selectively strengthen early research at the interface between HealthCare and CropScience, and continue driving the successful commercialisation of the recently launched pharmaceutical products.
"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 commented. 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, large-scale facilities. We have steadily invested in these facilities, even in difficult economic times," Dekkers pointed out, citing the world-scale production facilities in Shanghai, China, and the new TDI plant in Dormagen, Germany, which is to be officially inaugurated in December. Between 2009 and 2013 alone, Bayer invested a total of over EUR 3.8 billion in property, plant and equipment and research and development for the MaterialScience business.
Following the intended flotation, MaterialScience will be Europe's fourth-largest chemical company; it had global sales in 2013 of more than EUR 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.