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FRANKFURT (Reuters) -Bayer’s new CEO plans to cut management jobs to speed up decision-making as a first step to overhaul the embattled German industrial group, which is facing investor pressure to break up, three people familiar with the matter said.
Bill Anderson, at the helm since June, is keen to show investors speedy improvements and buy himself time to lay out broader restructuring plans over the next few months, the sources said. They declined to be identified because the details are confidential.
Anderson plans to soon present initial plans for cutbacks at an internal strategy meeting, one of the sources said, while another said the measures would affect middle-to-upper layers of management, resulting in as yet unspecified one-off costs for golden handshakes for departing employees.
The number of jobs affected and timing of an announcement are not known.
A Bayer (OTC:BAYRY) spokesperson declined to comment.
Anderson, a former Roche executive, told analysts after the release of second-quarter results that too much red tape – alongside the company’s debts and lawsuits related to weedkiller Roundup and chemicals known as PCB – meant the company was missing out on opportunities.
“The litigation overhang, the corporate bureaucracy, debt levels, these all weigh on our ability to focus on the mission,” he said in August.
He added at the time that he will change from annual to 90-day budgeting cycles, and let teams of people close to customers make business decisions, rather than a layer of management above them.
MARKET CONCERNS
Among the people leaving the maker of drugs and pesticides under the overhaul, for which the CEO has hired consultancy firm McKinsey, is head of group strategy Oliver Kohlhaas, who will not be replaced, two of the sources said.
Kohlhaas and McKinsey declined to comment.
Anderson’s appointment was widely welcomed by shareholders as a qualified CEO pick to overhaul Bayer, replacing predecessor Werner Baumann, who had drawn criticism for not being responsive to capital market concerns.
But the new CEO will likely have only a short respite period to come up with concrete strategic proposals. Investor Artisan Partners (NYSE:APAM) told Reuters last month the company needs to separate its three main businesses – agriculture, prescription drugs and consumer health products.
Activist Bluebell Capital Partners called for a breakup earlier this year. Other top investors, including mutual funds group Deka, had railed against the company’s previous leadership. Some have said an easy fix would be to separate the healthcare and agricultural businesses.
Anderson has been tasked with reviving Bayer’s share price, which has underperformed rivals, weighed down by the lingering costs of U.S. weedkiller litigation.
Anderson said last month he was not ruling out any options as part of his review of the company’s strategy and structure, saying he was “leaving no stone unturned”.
He added he would provide an initial update in the coming months and detailed plans in early 2024.
The company said in an unscheduled statement last month that it was projecting a steeper fall in earnings and zero free cash flow, in what some analysts suggested was Anderson seeking to get bad news out quickly to allow for a fresh start.
