Activist Bluebell Said to Build Bayer Stake in Breakup Push

(Bloomberg) — Activist investor Bluebell Capital Partners has built a stake in Bayer AG and is pushing for a breakup of the German pharmaceutical and agriculture company, people with knowledge of the matter said. 

Bluebell, which has amassed an undisclosed holding in Bayer, is also seeking an overhaul of the company’s corporate governance, according to the people. It has been speaking to Bayer’s supervisory board behind the scenes over the past few months, the people said, asking not to be identified because the information is private. 

The activist has asked Bayer to separate its crop science business from its pharmaceutical unit, which it argues could lead to more than 70% upside for shareholders, the people said. It’s also been pressing Bayer to explore a sale or listing of its consumer health arm, and is calling for a new independent chairman for its supervisory board, according to the people. 

Bayer’s American depositary receipts rose 6.4% to $14.70 Tuesday in New York trading, giving the company a market value of about $58 billion. They had earlier jumped as much as 8.5%, the biggest intraday gain since November 2020.

Chief Executive Officer Werner Baumann has been under pressure from Bayer shareholders since the company’s 2018 deal for crop science giant Monsanto. Activist Elliott Investment Management has previously called on Bayer to consider splitting up. On Monday, Jeff Ubben’s Inclusive Capital Partners disclosed a 0.8% stake in the German company. 

Bayer’s $63 billion takeover of Monsanto quickly became a legal headache, and the company has set aside an estimated $16 billion to cover lawsuits claiming controversial weedkiller Roundup causes cancer. Amid the Monsanto litigation, Bayer’s share price has fallen by about half from its level before the deal. Baumann has insisted the company’s current configuration is the right one.

A representative for Bluebell declined to comment. A spokesperson for Bayer said the company is always willing to engage constructively with stakeholders, declining to comment further.

While it’s a small activist investor, Bluebell has made a name for itself in Europe by investing in high-profile targets like dairy producer Danone SA, where it successfully engineered the removal of CEO Emmanuel Faber. Bluebell sometimes works with bigger funds to press for change, though not all of its campaigns have been successful. 

It’s called for the ouster of BlackRock Inc. boss Larry Fink and demanded a shakeup at luxury-goods conglomerate Richemont, which have so far rebuffed its calls. Some activist defense advisers have criticized Bluebell for pushing for changes without buying large stakes in its targets.

–With assistance from Liana Baker and Tim Loh.

(Updates with closing ADR price in fourth paragraph)

©2023 Bloomberg L.P.

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