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 News of the planned spin-off of the MaterialScience unit, which has
a core profit margin of 9.5 percent compared with the group's 20.9
percent, lifted Bayer shares to a record high. It follows a wider
healthcare industry trend to streamline operations.
"In this way Bayer would position itself as a world-leading company
in the field of human, animal and plant health," the company said in
a statement, adding that its supervisory board would discuss the
plans at a board meeting on Thursday.
Investors have long speculated that Bayer could split its
operations, and Jefferies said in a note this week that spinning off
MaterialScience would allow the company to focus on building
critical mass in animal health, potentially via acquisitions.
They pointed to Zoetis, the previous veterinary division of Pfizer
that is now a standalone business, as one possible target.
Shares in Bayer were up 4 percent at 110.50 euros by 0725 GMT,
lifting the European chemicals index 1.1 percent.
Equinet analysts value the MaterialScience unit, which makes
polycarbonate plastics used in products from panoramic luxury-car
roofs to blu-ray disks, at almost 10 billion euros while brokerage
DZ Bank said it was worth about 11 billion euros.
The unit's adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) tumbled 15 percent in 2013, on sales of 11.2
billion euros ($14.4 billion), giving it the margin of 9.5 percent.
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Healthcare, the company's largest unit, had an adjusted EBITDA
margin of 28.2 percent, and smallest unit CropScience had 25.5
percent.
Despite stable volumes and prices, Bayer said it had been unable to
pass on MaterialScience's large increases in raw materials costs to
its customers.
"The (plastic) business has underperformed the company's
life-sciences operations," brokerage Close Brothers Seydler said in
a note.
(Additional reporting by Ben Hirschler in London; editing by Thomas
Atkins and Pravin Char)
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