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Bayer activist investor: Can an activist investor pull Bayer out of its slump?

By Fitri Wulandari

Edited by Vanessa Kintu

14:14, 11 January 2023

Bayer sign light board in Frankfurt international airport is rotating around , Pharmaceutical company
Bayer is a multinational pharmaceutical and life sciences company. Photo: Sirada Wichitaphornkun / Shutterstock

Since its contentious acquisition of US agricultural biotech company Monsanto in June 2018, Bayer AG’s (BAYN) stock price has never rebounded.

BAYN live price chart

The company has been busy settling more than 100,000 lawsuits related to Roundup, Monsanto’s weed killer. 

In recent Bayer news, activist investor Jeff Ubenn purchased a 0.83% stake in the German company that invented the painkiller aspirin. Will activist investors in Bayer turn its share price trend around?

About Bayer – from Aspirin to seeds and weed killer

Bayer AG (BAYN) is a multinational pharmaceutical and life sciences company based in Leverkusen, Germany. It was founded in 1863 by dye salesman Friedrich Bayer and master dyer Johann Friedrich Weskott. 

Originally called Friedr. Bayer et comp, the company manufactured and sold synthetic dyestuffs when the chemical industry was still in its infancy following the discovery of dyes derived from coal tar. It became a joint stock company in 1881 with the name Farbenfabriken formed after the founding of the pharmaceutical department. 

It was during this time that the company’s chemist, Felix Hoffmann, discovered aspirin, which would go on to become one of the most common pain relievers found in home medicine cabinets.

Since its establishment, the 159-year old company has expanded its business beyond chemical products to include consumer healthcare and agricultural chemicals, such as seeds and crop science. 

It has also acquired several pharmaceutical and biotechnology companies. Notable acquisitions include German pharmaceutical Schering AG in 2006  and US agricultural biotech company Monsanto in 2018.

Bayer paid $63bn including debt to acquire Monsanto in the biggest acquisition in its history.

In January 1953, Bayer became a public company through an initial public offering (IPO). Its shares are listed on the Frankfurt Stock Exchange (FSE) under the ticker symbol BAYN. The company is also a constituent of the Euro Stoxx 50 Index (EU50) and the DAX 40 Index (DE40).

Bayer’s stock price saw growth for three years from June 2012 when it traded at the low of €47.92 ($51.52) a share to peak at €146.20 in April 2015 before dropping to below €130. Over the period, Bayer’s share price gained 155.6%.

As of the close on 9 January 2023, Bayer’s share traded at €51.86, gaining 4.78% year-to-date (YTD).

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Bayer (BAYN) 5-year price chart

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Bayer’s stock news: Jeff Ubben invests in Bayer

Hedge fund veteran Jeff Ubben, who runs activist investment fund Inclusive Capital Partners, recently announced that the company bought a 0.83% stake or 8.18 million shares in Bayer. The deal was worth €407m based on the share’s closing price on 5 January, Reuters reported.

Ubben’s investment came as Bayer’s market value waned following its acquisition of Monsanto in June 2018.

Monsanto has come under increasing scrutiny from activists and farmers for the safety of its genetically modified (GMO) crops and pesticides on the environment and human health, particularly its weed killer Roundup. 

The company has been involved in numerous lawsuits concerning the health risks of Roundup. According to Bayer, it has settled 108,000 out of 149,000 claims

In an interview with FT, Ubben called for Bayer to hire a new executive officer from outside the company’s management ranks. 

Ubben, who sits on the board of the World Wildlife Fund (WWF), said one of the obligations of a CEO was to drive a company’s stock price and the current management is unable to do so.

Bayer’s share price has fallen 47.58% from €98.94 on 7 June 2018, when it completed Monsanto’s acquisition.

Ubben is not the only activist investor to have built up ownership in Bayer. In 2018, Paul Singer, through his hedge fund Elliott Management, took a position in Bayer, according to a Reuters report and confirmed in a press release in 2019.

Bayer’s stock outlook: What is the outlook for BAYN?

A consensus of 21 analysts polled by Market Screener rated BAYN’s share a ‘buy’, as of 10 January. The analysts set a 12-month price target of €75.32 a share for Bayer, with a high price target of €106 and a low of €54.

Keep in mind that analysts’ projections and algorithm-based price prediction services can be wrong when looking for Bayer's stock price forecast. Before investing in Bayer’s stock, you should always conduct your due diligence, which includes reading recent news, analyst notes, and company releases. Pass performance is no guarantee of future success. In addition, never trade with money you cannot afford to lose.

FAQs

Is Bayer publicly traded?

Yes. Bayer is listed on the Frankfurt Stock Exchange. It is also a constituent Euro Stoxx 50 Index and the DAX 30 Index.

Who owns Bayer?

There is no immediately available information on the owners of Bayer. The company’s page on the Frankfurt Stock Exchange only listed BlackRock as the shareholder with a 6.5% stake.

Is Bayer a good stock to buy?

Bayer’s share price has been on a downtrend since June 2018. However, whether or not it is a good stock depends on your investment goal, portfolio size, and your risk tolerance. Always carry out your research before making any investment or trading decision. Most importantly, never trade with money that you can’t afford to lose.

Markets in this article

BAYN
Bayer
26.25 USD
-0.85 -3.150%
EU50
EU Stocks 50
4827.7 USD
-45.7 -0.940%
DE40
Germany 40
18172.4 USD
-167.2 -0.910%

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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
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