German drug and chemical giant Bayer AG elaborated Thursday on plans to spin off its plastics and materials segment through a public stock offering by mid-2016, and its chief executive said he did not expect any buyers to pick up the business in the meantime.
“We believe the independent floating of MaterialScience is best for all stakeholders,” Marijn Dekkers said in an interview with Bloomberg TV following the release of Bayer’s third-quarter results. A possible sale “is not in the cards,” he said.
Bayer MaterialScience — which makes plastics, chemicals and coatings used in foams, insulations, car parts, DVDs, among other products — maintains its North American headquarters at Bayer’s campus along the Parkway West in Robinson. The company has about 2,200 workers in the region, including 1,200 at Robinson and 1,000 at a Bayer HealthCare business formerly known as Medrad.
Officials at Bayer’s local operations declined to comment on Thursday’s news.
The company in September confirmed it would separate the MaterialScience operation, following months of speculation about whether Bayer would divest the business. It did not provide any details at the time.
In conjunction with a third-quarter earnings release Thursday, Bayer said the unit will be floated on the stock market by mid-2016 “at the latest” so that it will have direct access to capital markets and be positioned to grow further as a separate, industrial company.
Bayer has made no secret of its wish to focus its energies on two other business subgroups: health care and crop sciences. The health care segment, which earlier this month acquired the consumer business of Merck & Co., includes iconic brands such as Bayer Aspirin, Aleve and Alka-Seltzer. The agricultural products group includes seeds, weed killers and pest controls.
By spinning off the plastics and materials group, “We set the course for the Bayer Group to focus entirely on the Life Science businesses,” the company said its third-quarter management report.
Material sciences generates about 11 billion euros ($13.9 billion) in annual global sales and is poised to be “a good, new independent company,” Mr. Dekkers said.
Ten years ago, Bayer had spun out its specialty chemical business into a new company called Lanxess, which also has its North American base in the Pittsburgh region.
Meanwhile, Bayer said increases in third-quarter sales and income were driven by growth in all of its business segments, including the material sciences unit.
Net income jumped by 12.7 percent to 826 million euros ($1.04 billion), while revenues rose by 5.6 percent to 10.2 billion euros.
Third-quarter sales in North America increased by 7.4 percent to 2.3 billion euros. The material sciences business in North America generated revenues of 678 million euros, up 8 percent over the third quarter of 2013.
Bayer raised its guidance for the year to 42 billion euros, up from 41 billion euros. Analysts had expected that move as a result of the Merck acquisition.
Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.
First Published: October 30, 2014, 2:29 p.m.
Updated: October 31, 2014, 2:34 a.m.
