Germany's Bayer to spin off plastics, focus on life science
German chemicals and drugs giant Bayer, maker of Aspirin painkillers, said Thursday it would spin off its plastics division to concentrate on health care and agrochemicals.
Bayer plans to "focus entirely on the Life Science businesses -- Health Care and Crop Science -- and float MaterialScience on the stock market as a separate company," it said in a statement.
Bayer, a more than 150-year-old chemical manufacturer based in the western German city of Leverkusen, said it "is positioning itself as a world-leading company in the field of human, animal and plant health".
Its supervisory board unanimously approved the move, to be completed by late 2016, under which the company promises no job losses.
"Both companies are major players in their respective fields," said Bayer chief Marijn Dekkers in a telephone media conference, referring to the core company and the new one.
The new business will be publicly traded within 12 to 18 months, either "through an IPO or spin-off", he said.
Bayer's life science activities currently make up 70 percent of sales, including of cancer and pulmonary hypertension medicines, and it is expanding them further by acquiring US drug giant Merck's over-the-counter business.
Spinning off MaterialScience -- which would create Europe's fourth-largest chemical company after BASF, LyondellBasell and Evonik -- would give the new entity "direct access to capital for its future development", Bayer said.
- Bayer shares surge -
The plastics division, which has faced tough global competition, especially from Asia, produces polymers and other materials for a vast range of products from paints and adhesives to car seats, furniture, shoes and footballs.
After its flotation under a new name, the entity, which booked worldwide sales last year of more than 11 billion euros ($14 billion), would have a global workforce of 16,800.
The future Bayer Group, which posted sales last year worth 29 billion euros, will employ nearly 99,000 people.
The market welcomed the news. Bayer shares closed the day up 6.17 percent at 112.70 euros on Frankfurt's DAX blue-chip index, where Bayer has the largest capitalisation after engineering giant Siemens.
The broader index closed up 1.41 percent.
Equinet analyst Marietta Miemitz said the plastics division was worth around $10 billion, which would make for one of Germany's biggest IPOs in recent years.
Germany's chemical industry, of which around 20 percent is pharmaceuticals, ranks fourth globally by sales behind the United States, Japan and China, according to official figures.
The industry employs some 430,000 people and expects sales worth more than 190 billion euros for 2014.
Bayer, a pioneer in the sector, was founded in 1863 as a maker of synthetic dyes for textiles. It expanded into pharmaceuticals and in 1899 launched Aspirin.
By 1913, it had 10,000 staff and generated over 80 percent of revenues from exports.
In recent years, it has launched a series of takeovers, including of Aventis CropScience and a division of drugs makers Roche.
© 2014 AFP