Bayer AG plans to spin off its plastics unit, accelerating its retreat from the chemicals industry after 151 years to focus on more lucrative life- sciences businesses.
The decision by the management board is subject to approval by the supervisory board, the Leverkusen, Germany-based company said in a statement today. Bayer was reviewing options for Bayer MaterialScience after chemicals company Evonik Industries AG showed potential interest, Bloomberg News reported in April, citing people with knowledge of the matter.
The split will leave with Bayer with units that make pharmaceuticals and crop chemicals and seeds. The company is one of Europe’s last remaining drug and chemical conglomerates, along with Merck KGaA. Bayer exited large parts of its specialty chemicals portfolio a decade ago by spinning off its Lanxess AG subsidiary.
The plastics business will be listed on the stock market as a separate company, Bayer said. “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 the statement.
Bayer will release more information after a Supervisory Board meeting today, Guenter Forneck, a spokesman, said by phone. He declined to comment further.
Bayer rose 5.1 percent to 111.60 euros at 9:03 a.m. in Frankfurt.
The announcement caps years of speculation that Bayer would get rid of the unit. The plastics business in the past has earned a return that’s lower than the cost of the capital employed, while at the same time Bayer Health Care has thrived as the company won approval of new medicines such as the Xarelto blood thinner, the eye medicine Eylea and the Stivarga and Xofigo cancer treatments.
Bayer Material Science makes polymers found in houses, cars and businesses -- molded around appliances and cushioning sports goods, coating the hulls of boats and bodies of cars and stuffed into the walls of houses. The business had sales of 11.2 billion euros ($14.5 billion) last year, down about 2.2 percent from the previous year.
Under Chief Executive Officer Marijn Dekkers, Bayer has expanded in health care. The company agreed in May to buy Merck & Co.’s over-the-counter drug business for $14.2 billion, and Dekkers also has expressed interest in acquisitions in veterinary medicines. Bayer may target Zoetis Inc., the U.S. animal-health company spun off from Pfizer Inc. last year, Andrew Baum, a London-based analyst for Citigroup, wrote in a report in April.