Bayer faces more activist investor pressure as Inclusive Capital calls for quick regime change: report

Investor pressure on Bayer keeps mounting.

After recent run-ins with Bluebell Capital Partners and Union Investment Portfolio Manager Markus Manns, Inclusive Capital Partners’ Jeffrey Ubben has joined the chorus of shareholders agitating for change at the German conglomerate, Reuters first reported.

Specifically, Ubben has attempted to marshal other shareholders to press Bayer Chairman Norbert Winkeljohann to quickly replace CEO Werner Baumann, the news outlet said, citing investors and other sources close to the talks.

Baumann’s contract will be up in April 2024, and Bayer has reportedly started looking for his replacement. Late last summer, Bloomberg reported Winkeljohann was assessing candidates both inside and outside the company with the goal to advance a new CEO prospect in time for Bayer’s upcoming shareholder meeting in April.

As for the latest investor campaign, David Herro, deputy chairman of Harris Associates, told Reuters that Ubben had reached out to discuss Bayer, without providing further details. Reuters says Ubben has also been in touch with a portfolio manager at a large German mutual funds firm.

Ubben’s rallying cry comes after his firm Inclusive Capital last month announced it had snagged a 0.83% stake in Bayer, Bloomberg and others reported.

Speaking with the Financial Times in early January, Ubben said he’d “prefer an external hire” to replace Baumann, calling the strategy a “clean break from the past, which has been internal hires.”

Baumann has been in investors’ crosshairs for several years now, with much of stakeholders’ discontent stemming from Bayer’s ill-fated, $63 billion merger with Monsanto. Lawsuits claiming that Monsanto’s Roundup weedkiller causes cancer have snowballed and significantly hurt Bayer’s stock performance.

Investors have also been pressing for a potential breakup of the company along its consumer health or crop science divisions.

While shareholders heaping pressure on Bayer is nothing new, 2023 has been especially eventful so far.

In mid-January, activist investor Bluebell Capital was said to have bought an undisclosed stake in the company to pursue a breakup of Bayer’s pharma and crop science units. Bluebell also wants Bayer to follow a wider industry trend by separating its pharma business from its less profitable consumer health arm.

About a week later, Manns went on the attack against Winkeljohann for failing to initiate enough dialogue with investors.

In addition to Union Investment and Bluebell, Elliott Investment Management has also urged Bayer to consider a breakup.

Whatever happens in the meantime, Bayer investors will have a chance to weigh in at the company’s annual shareholder meeting on April 28.