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Bayer's record high on plastics move

Thursday, September 18, 2014 - 01:27

Germany's Bayer plans to list its less profitable plastics business on the stock market in a deal that could value the division at around 10 billion euros ($13 billion). As Sonia Legg reports, it's seeking to focus entirely on healthcare and crop science.

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It's an ever growing trend - big healthcare firms focusing on a few rather than many sectors. Bayer's latest plan follows that strategy. It's selling off its less profitable plastics business. Quentin Webb is from Reuters Breakingviews. (SOUNDBITE) (English): QUENTIN WEBB, REUTERS BREAKINGVIEWS, SAYING "People are rewarding companies who say they are going to do one thing better rather than doing a range of things, otherwise investors tend to burden companies with what is called a conglomerate discount where it is worth less than some of the parts because they are trying to do different things." The German firm's MaterialScience division - which makes products from car roofs to blu-ray disks - has been valued at around $10 billion euros. But its core profit margin of 9.5% is less than half the group's overall margin. That's partly because it hasn't been able to pass the high cost of raw materials onto customers. The decision to streamline sent Bayer's shares up 4% to a record high. And that might not be the end of the reshaping. (SOUNDBITE) (English): QUENTIN WEBB, REUTERS BREAKINGVIEWS, SAYING "Bayer has already over the years been changing its shape. It bulked up recently in over-the-counter drugs with a very big purchase there so what I am saying is that there might be one last round of focussing to do because they also have this big crop science business. Perhaps that too could eventually come out." For now though crop science remains a key part of Bayer's plans. It says it wants to be the world's leading company in human, animal and plant health.

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Bayer's record high on plastics move

Thursday, September 18, 2014 - 01:27