Bayer to Spin Off Most of its Chemical Business

FRANKFURT, Germany — In an effort to concentrate on its pharmaceutical and consumer health-care brands, as well as agriculture products and some remaining specialty chemicals, Bayer announced on Friday that it would spin off most of its chemical businesses.

Bayer Chemicals is to be combined with certain parts of the polymers business in a new company with the provisional name “NewCo.” The aim for the company is to be listed on the stock market under a new name by early 2005 at the latest. NewCo will have sales of about $6.4 billion (U.S.) per year and employ 20,000 people in 20 countries, according to Bayer.

Following the reorganization, Bayer will have three operating subgroups — Bayer HealthCare, Bayer CropScience and Bayer MaterialScience. Bayer CropScience business units include Bayer Environmental Science, which manufactures insecticides for the turf and ornamentals field, as well as the structural pest control market. Bayer will be left with 96,000 workers, and the company says no jobs will be lost in the restructuring. It is already halfway through a three-year program to drop 15,000 jobs.

“Both Bayer and NewCo will benefit from the split, because a stock market listing will be highly attractive for both shareholders and employees,” explained Bayer CEO Werner Wenning.

Wenning added that the spin-off will help Bayer strengthen its core businesses by pooling all of its resources.

The author is Managing Editor of Pest Control Technology magazine, a sister publication to Lawn & Landscape magazine, and can be reached at bharbison@pctonline.com.