Bayer's new CEO plans to cut management positions with the aim of streamlining decision-making. This would be the first step towards a deep restructuring of the German industrial conglomerate, which currently faces pressure from investors to break up, according to three sources close to the matter.
Bill Anderson, who took office in June, is determined to demonstrate rapid improvements to investors and give himself time to define broader restructuring plans in the coming months, the sources indicated. They preferred to remain anonymous as the details are confidential.
One of the sources noted that Anderson plans to present the first cost-cutting plans soon at an internal strategy meeting. Another source added that these measures will mainly affect middle and senior management levels, which would entail costs not yet specified for compensation to employees leaving the company.
So far, it is unknown how many jobs will be affected or when the official announcement will be made.
A Bayer spokesperson preferred not to comment on the matter.
Anderson, a former Roche executive, told analysts following the second quarter results publication that the company was losing opportunities due to excessive internal bureaucracy, debt, and litigation related to the Roundup herbicide and chemicals known as PCB.
Anderson indicated in August that he would shift from annual budget cycles to 90-day cycles, allowing teams close to customers to make business decisions, rather than having an upper management layer decide for them.
Market Concerns
Among those who will leave Bayer in this restructuring process, for which the CEO hired the McKinsey consulting firm, is the group's strategy chief, Oliver Kohlhaas, who will not be replaced, according to two sources.
Both Kohlhaas and McKinsey declined to comment.
Anderson's arrival was well received by shareholders, who considered him a wise choice to renew Bayer, replacing Werner Baumann, who was criticized for not addressing capital market concerns.
However, Anderson is expected to have a short grace period to present concrete strategic proposals. Some investors have suggested that a solution would be to separate health and agriculture businesses.
Anderson's task will be to revive Bayer's stock price, affected by lawsuits in the U.S. related to herbicides.
Last month, Anderson noted that he would not rule out any options in his review of the company's strategy and structure, assuring that he will leave no stone unturned.
He added that he would provide an initial update in the coming months and detailed plans in early 2024.
Last month, the company projected a greater decline in earnings and zero free cash flow, which some analysts interpreted as Anderson's attempt to disclose bad news quickly to allow for a fresh start.
With information from MarketScreener.
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