Activist investor rallies Bayer shareholders as pressure mounts on CEO: sources By Reuters

By Emma-Victoria Farr, Patricia Weiss and Oliver Hirt

FRANKFURT (Reuters) – Bayer (OTC:) investor Jeff Ubben has contacted other shareholders of the German group, investors and sources familiar with the matter told Reuters, in an apparent attempt to rally support for big changes in the drug company to pesticides. .

The campaign increases pressure on non-executive chairman Norbert Winkeljohann, who has faced calls from big shareholders for the swift replacement of chief executive Werner Baumann, who engineered Bayer’s troubled business. Monsanto (NYSE:) acquisition.

The approaches come after Ubben’s activist investment fund, Inclusive Capital Partners, said last month it had bought a 0.83% stake in Bayer.

Ubben told the Financial Times at the time that he would prefer an outside candidate to replace Baumann and that while a break from the group may not be necessary, it should be considered.

David Herro, a vice president at Harris Associates, told Reuters in brief emailed comments that Ubben had contacted him about Bayer. He did not provide further details.

Ubben has also contacted a portfolio manager at a large German mutual fund firm and proposed a meeting, according to a person familiar with the matter.

Another source said Ubben had approached a large number of Bayer’s institutional investors to gain support for a campaign to quickly replace Baumann with a nominee from outside the company to revive the declining share price.

The investors declined to be named due to the sensitivity of the matter.

Ubben did not respond to requests for comment.

A spokesman said Bayer was always open to a constructive dialogue with shareholders and declined to comment further.

Two big German mutuals and Bayer’s main shareholders, Union Investment and Deka, have also said they would like a quick change of chief executive at the group, whose business spans medicines, consumer health products, seeds and pesticides.

Investors who have publicly called for a quick CEO change hold at least a combined 6.7% in Bayer, according to Refinitiv data.

Activist investor Bluebell Capital Partners, which has built an undisclosed stake, is looking for something similar. He also wants a break from the company.

STRATEGIC CHANGES

It is not clear if there is a consensus on the strategic changes that shareholders want future leadership to follow.

Speaking on condition of anonymity, a fund manager said Bayer’s breakup should not be rushed and can come in gradual moves.

Harris Associates’ Herro said he preferred an outside CEO appointment in the near future, but added there was “nothing specific” when asked about his demands regarding the group’s strategy and structure.

Any attempt by shareholders to coordinate how they exert influence over a company is a balancing act because shareholders acting in concert and holding a combined 30% voting interest have to make a takeover bid to the remaining shareholders under German law.

Other obligations that come with acting in concert include publishing the size of joint holdings, which financial investors and activists generally seek to avoid.

The annual meeting of shareholders scheduled for April 28 will be an opportunity for investors to express their views.

Despite recent improvements in the company’s agricultural business and drug development prospects, Bayer’s shares have been hit by litigation related to a product it acquired through the 2018 Monsanto acquisition.

A German industry stalwart with a history of almost 160 years, Bayer has lost more than 40% of its market value since it bought Monsanto.

Shareholders have also cited the market’s lack of confidence in senior management as a drag on the shares.

Baumann, who engineered the Monsanto deal with the backing of then-chairman Werner Wenning, was given a new contract in 2020 that will run through 2024 and said at the time that he would leave the company when it expires.

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