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Bayer considers options
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December 8, 2000: 8:53 a.m. ET
German drugs, chemicals maker hires investment bank advisers amid bid talk
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LONDON (CNNfn) - Germany's Bayer AG appointed Friday Credit Suisse First Boston and Deutsche Bank AG to advise on strategic options, as rumors abound that the chemical and drug conglomerate is preparing its defenses against a possible hostile bid.
The Leverkusen, Germany-based company has long been subject of takeover speculation with Switzerland's Roche Holding AG frequently tipped as a possible predator, analysts said, but they weren't convinced that an offer was on the cards.
 "All companies have defense documents lying around just in case, but I don't expect an offer," Themis Themistocleous, an analyst at UBS Warburg, told CNNfn.com. "It's not easy to interpret this move, in September the company told analysts it would not split the company up or any other dramatic move."
Another analyst, who wished to remain anonymous, said he trusted the management when they said no major strategic change would occur.
Shares in Bayer rose  1.77, or 3.3 percent, to 55.37, valuing the company at about 41 billion ($36.74 billion).
Michael Stone, chemicals analyst at HSBC in London, doubted Bayer's strategic review would lead to a split of the group, but he said the company "might yet have its hand forced by outside intervention."
Fund managers and analysts suggested that the company would be worth more if split into two.
"People today want to have a pure pharma focus, which is why Novartis and Aventis (PAVE) are getting out of chemicals," Wendy Cochrane of Edinburgh Fund Managers said. "(Bayer) will always trade at a discount because of that."
Bayer's shares are currently worth around 19.5 times its estimated earnings per share for 2001, compared with an average price-earnings ratio of more than 30 for European drug compoanies.
Bayer spokesman Michael Schade said the strategic review, targeted at increasing shareholder value, was "not primarily" aimed at fending off a hostile takeover bid.
Schade said "brainstorming" sessions with the banks -- Bayer's regular advisers on corporate deals -- had already been going on for four weeks and the first results of the review process were expected at the start of next year. Any planned changes might be marginal, he added.
Separately, the company said it would invest 8 billion over the next four years to strengthen its German research and production facilities.
--from staff and wire reports 
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Bayer
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