The marketing strategy of large conglomerates has pointed in one direction in recent months: dividing the business into smaller parts. However, Bayer seems not to go in that direction.
German drug and pesticide maker Bayer says it has no plans to split its three main business segments into smaller, separately listed companies.
Werner Baumann, CEO of the company, confirmed this on Thursday, November 18, amid a cataract of versions about the possible separation and while other conglomerates, such as Toshiba, Johnson & Johnson and General Electric announced strategies in this regard.
“We are going to continue the path we are on, which is what our company is developing in the three business pillars that we have: pharmaceuticals, crop science and consumer health,” Baumann told Bloomberg In an interview.
The journalist’s question pointed to the issue because in recent weeks several companies said that they are planning or have already begun to segment their businesses in order to simplify their structures and better focus on each niche.
Baumann said the decision to continue operating the three units under the same umbrella was made by the company’s management and supported by its supervisory board.
“What works for one company does not necessarily work for another,” Baumann said, adding that Bayer’s three units have common platforms, so they cannot be simply separated.
Baumann’s comments reiterate what he said in 2018 after analysts called for a breakout strategy so that Bayer’s share price wouldn’t crash.
According to many analysts, the company’s shares are not rebounding because of the so-called “conglomerate discount” that affects companies that have mixed businesses with little synergy.
Baumann’s comments are in addition to those of Bayer’s non-executive board chairman Norbert Winkeljohann, who also spoke out against a division strategy. “Dividing the company would not create value, it would destroy it. That cannot benefit shareholders, ”Winkeljohann said.