Bayer feeling more heat from activist investors, this time from Bluebell

Since making an ill-advised $63 billion buy of Monsanto in 2018, Bayer has faced heaps of pressure from investors that have called for the company to oust its leadership and to restructure.

Now comes new pressure from a familiar source. Bluebell Capital Partners has bought an undisclosed stake in the company and is agitating for a breakup, sources told Reuters.

Bluebell’s move comes following a similar push in 2021 to effect change at GSK. At the time, the British pharma giant was in the midst of separating from its consumer health unit. But Bluebell wanted more change, urging for the replacement of CEO Emma Walmsley and Chairman Jonathan Symonds.

In response to the Bluebell news at Bayer, the company’s shares jumped 3.6% last Wednesday. That, coupled with Bayer’s gaudy expectations about its newer drugs—revealed during the J.P. Morgan Healthcare Conference—drove Bayer’s shares up 10% over the last week. Since the start of the year, Bayer’s market cap has swelled 20% to $61 billion.

Bluebell has been in discussion with the Bayer board over the past few months, according to Reuters. Bluebell is urging the company to separate its crop science and pharma units, with the investor group saying the move could create more than 70% upside for shareholders.

Bluebell also wants Bayer to follow an industry trend by separating its pharma business from its less profitable consumer health unit. The investors also are calling for an independent chairman of the company’s supervisory board, Reuters' sources say.

Bayer CEO Werner Baumann has been under scrutiny since he took over in 2016 and weeks later initiated the takeover of Monsanto, which finished in 2018. With the deal, Bayer inherited mounting litigation over weedkiller Roundup. The company has earmarked $16 billion to cover costs associated with resolving lawsuits.

In 2018, Elliott Management bought into Bayer and began applying pressure to split up. The company has resisted those calls. Fourteen months ago, Baumann reiterated Bayer’s intent to remain intact even as other pharma giants, such as Johnson & Johnson, were breaking up.

“What’s right for one company is not necessarily the right thing for the other company,” Baumann said during Bloomberg’s New Economy Forum in Singapore.

Bluebell was established in 2019 but has become an immediate force as an activist investor, making a splash when it forced the departure of Danone SA CEO Emmanuel Faber from the food products powerhouse. Bluebell has had mixed success trying to reshape other companies such as BlackRock and Glencore.