{"text":[[{"start":12.38,"text":"Bayer’s 2018 acquisition of US crop science company Monsanto is the takeover that just keeps on taking. "},{"start":18.759,"text":"This week’s €2.5bn impairment charge adds to already extensive financial damage. "},{"start":24.302,"text":"It will reinvigorate activist demands for a break-up. "}],[{"start":28.32,"text":"Bayer paid $65bn for Monsanto assets that included a glyphosate weedkiller called Roundup. "},{"start":34.712,"text":"Management initially underestimated the high cost of an accompanying health scare, as managements typically do. "},{"start":40.554,"text":"Allegations that Roundup is carcinogenic have prompted numerous lawsuits. "}],[{"start":45.629999999999995,"text":"Bayer trades at a depressed enterprise valuation of about 7 times forward ebitda. "},{"start":51.346999999999994,"text":"Change may now be in the air. "},{"start":53.31399999999999,"text":"Werner Baumann, the chief executive responsible for the Monsanto purchase, has stepped aside after a long period of poor share price performance. "},{"start":61.081999999999994,"text":"Replacement Bill Anderson started last month. "},{"start":63.724,"text":"As a former Roche executive, his expertise is drugs, not weedkillers. "}],[{"start":69.25,"text":"A couple of things look odd about the impairment. "},{"start":72.079,"text":"First, it is relatively small, given that Bayer has about €39bn of goodwill on its balance sheet, more than half of which derives from the Monsanto acquisition. "},{"start":81.759,"text":"Second, Bayer blames a weak glyphosate market, which might be a temporary phenomenon, for the writedown. "},{"start":87.92699999999999,"text":"About 60 per cent of world sales are generic products, most of which are made in China. "}],[{"start":93.78999999999999,"text":"Anderson will hopefully substitute signal for noise when he presents earnings on August 8. "},{"start":98.607,"text":"He should signal whether a restructuring is likely. "},{"start":101.39899999999999,"text":"Activists Inclusive Capital and Bluebell have called for this. "},{"start":104.71699999999998,"text":"They favour a spinout of the crop science unit, a business that troubles environmental, social and governance investors. "}],[{"start":112.10999999999999,"text":"That would make sense. "},{"start":113.73899999999999,"text":"Even at 10 times next year’s ebitda, a sixth cheaper than rivals FMC and Corteva, Bayer’s crop science unit should be worth about €60bn, 2024 Visible Alpha estimates imply — albeit undiscounted for a long tail of legal claims. "},{"start":128.444,"text":"Compare that with the group’s total enterprise value of €86bn. "}],[{"start":133.14999999999998,"text":"Bayer has argued that cash flow from crop science and its consumer health unit help fund its growing pharmaceuticals pipeline. "},{"start":140.004,"text":"But Bayer’s persistently low multiple against agrochemical and pharma peers underscores the need for change. "}],[{"start":146.46999999999997,"text":"Anderson wishes to boost pharma, for example, by removing centralised research budgeting. "},{"start":152.09899999999996,"text":"But that could take years to lift the group’s low valuation. "},{"start":155.17899999999997,"text":"Like all incoming bosses, he has a brief window to cut loose a problem division. "},{"start":159.68399999999997,"text":"He should exploit it. "}],[{"start":160.92999999999998,"text":""}]],"url":"https://creatives.ftacademy.cn/album/116804-1690338671.mp3"}