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Poison for business: Monsanto weed killer with glyphosate
Photo: CHARLES PLATIAU/ REUTERS
Even under the financial pressure of US legal disputes worth billions, Bayer is cutting its dividend. Only the legally required minimum should be paid out for three years, as the pharmaceutical and agricultural chemicals group announced on Monday shortly before the stock market closed. This would result in a dividend of 0.11 euros per share for 2023, which will also be proposed to the general meeting in April.
The cuts are related to the level of debt, high interest rates and a tense situation with free cash flow. The step does not come as a surprise.
“Reducing our debt and increasing our flexibility is one of our top priorities,” said Bayer CEO Bill Anderson, according to the statement. The new distribution policy, which also incorporates suggestions from investors, should help.
Bayer is currently in a difficult situation. The wave of lawsuits in the USA over the alleged cancer risks of weed killers containing glyphosate has been bothering the company for years and has already cost billions. Analysts also see major financial risks from PCB lawsuits in the USA, an environmental toxin that has been banned for decades.
No new box office hit in sight
Both are a legacy of the US agrochemical company Monsanto, which it took over in 2018 for over 60 billion US dollars, which the then Bayer boss Werner Baumann pushed through despite the resistance of a number of investors. After years of price decline, the group is currently only worth 28.4 billion euros on the stock exchange.
To make matters worse, Bayer's existing best-in-class drugs will bring in less and less money due to patents gradually expiring, with no similarly lucrative follow-up drugs in sight. At the end of 2023, an important study on a drug that was supposed to help close the gap flopped.
Discussion about selling parts of the company
Given all these problems, the dividend cut is a bit of positive news for experts. Further extensive strategic measures are needed to repair the balance sheet. One such measure - which is probably also being discussed within the group - could be the sale of part of the company, in whole or in part. According to experts, however, in the current environment, only the consumer health sector involving over-the-counter medications is likely to be considered.
Analysts and shareholders are therefore looking forward to the beginning of March with great anticipation. Then Bayer CEO Bill Anderson, who only took over the helm in June 2023, wants to present his plans for the future of Leverkusen.
After the announcement of the mini-dividend, the Bayer share price initially fluctuated sharply, but then closed with a gain of a good one percent - and thus even a little above the price before the announcement.