Bayer to focus on health care, to spin off Bayer MaterialScience into a new, publicly listed entity

19-Sep-14

German major Bayer plans to spin off its polymer business into a new, publicly listed entity and move focus primarily to health care.The plan to spin off the polymer business, known as Bayer MaterialScience, was approved by Bayer’s management board early this month and by its supervisory board in a unanimous vote on Thursday. Bayer’s health care products are part of its life sciences group, which also includes its crop science division. The crop unit, which Bayer will be retaining, focuses on chemical and biological products like insecticides and plant seeds. The spun-off plastics business will continue to be based in Leverkusen, Germany. The spinoff will adopt a new name. “Our intention is to create two top global corporations: Bayer as a world-class innovation company in the life science businesses, and MaterialScience as a leading player in polymers,” Marijn Dekkers, said Bayer chief executive. Bayer said it planned to list the material science business as a separate company in the next 12 to 18 months. “A major reason for this move is to give MaterialScience direct access to capital for its future development,” Bayer said in its statement. “This access can no longer be adequately ensured within the Bayer Group due to the substantial investment needs of the life science businesses for both organic and external growth.” The separation also will allow the polymer business to better align its organization and structure for the industries it serves. Marijn Dekkers, chairman of the management board of Bayer added that the separate MaterialScience business would be able to align its strategy and corporate culture to technological and cost leadership. It will have greater freedom to make investment and portfolio decisions. Dekkers added: “We have steadily invested in facilities, even in difficult economic times.” Bayer invested more than 3.8 billion euros ($4.8 billion) in property, plant and equipment and research and development for the MaterialScience business between 2009 and 2013. He pointed to world-scale production facilities in Shanghai and the new TDI plant in Dormagen, Germany, which is to be officially inaugurated in December. Polyurethanes accounted for more than 53 percent of second-quarter sales for BMS, with polycarbonate bringing in more than 23 percent. The unit’s second-quarter sales volume in pounds grew 6 percent vs. the year-ago period.