Exclusive: Activist investor Elliott has taken position in Germany's Bayer - sources

FRANKFURT/NEW YORK (Reuters) - Activist investor Elliott has taken a position in Germany's Bayer <BAYGn.DE>, adding to the slew of investments the fund has made in German companies, three people familiar with the matter told Reuters on Friday.

Elliott has held shares in Bayer for more than a year, two of the sources said, declining to specify the size of the stake. A holding of more than 3 percent would trigger mandatory disclosure under German securities trading rules.

While Elliott has tried to talk to Bayer's top management it has not been able to get a meeting with Chief Executive Werner Baumann or his colleagues, one of the sources said.

News of the Elliott stake comes in the aftermath of Bayer's $63 billion takeover of Monsanto. The German company faces a slew of lawsuits over a suspected cancer link to the U.S. company's Roundup weedkiller.

Elliott, founded and run by Paul Singer, declined to comment, as did Bayer.

Elliott also owns stakes in steelmaker ThyssenKrupp <TKAG.DE>, utility Uniper <UN01.DE> and food processing machinery maker GEA Group <G1AG.DE>.

The presence of such activists on shareholder registers can raise pressure on company management to change strategy and improve shareholder returns. In the case of Thyssenkrupp for instance, where Swedish investor Cevian holds a larger stake, a new CEO was appointed who announced the company would be broken up into two parts.

Bayer shares, which had been down 0.8 percent before the news, closed 1.7 percent higher in Frankfurt.

But the stock has lost 38 percent so far this year, mainly due to risks relating to the more than 9,000 lawsuits brought over Roundup.

Investors have also urged Bayer to strengthen its drug development pipeline, even though its financial firepower was depleted by the Monsanto deal.

Chief Executive Werner Baumann last week unveiled plans to sell businesses, including the animal health operations and two consumer healthcare brands, and cut around 12,000 jobs, vowing to revive earnings growth.

PLANNED AUCTION

Bayer will kick off the planned auction of consumer brands Dr. Scholl's and Coppertone early next year, people close to the matter said.

The auction of footcare brand Dr. Scholl's, on which Bayer is working with investment banking boutique Sawaya, is expected to start at the end of January, they said.

The Coppertone sale, led by Citi <C.N>, will likely start towards the end of the first quarter, one of the people added.

Officials at Sawaya were not immediately available for comment while Citi would not comment.

The two brands could fetch a combined 1 billion euros ($1.1 billion), analysts have estimated.

Procter & Gamble <PG.N> and Reckitt Benckiser <RB.L> will likely be among the suitors for the consumer brands, for which they vied with Bayer when the German company bought them with other assets from Merck & Co <MRK.N> in 2014, people close to the matter have said.

The animal health division, the number five player in the industry and which could fetch between 6 and 7 billion euros, has whetted the appetite of several private equity groups. Bayer's rivals in veterinary medicine are seen as facing antitrust issues if they tried to buy the whole unit.

Bayer ranks fifth in veterinary medicine, behind Zoetis <ZTS.N>, the former Pfizer <PFE.N> unit, Elanco <ELAN.N>, formerly of Eli Lilly <LLY.N>, unlisted Boehringer Ingelheim, which acquired animal health assets from Sanofi <SASY.PA>, and drugmaker Merck & Co <MRK.N>.

(Writing by Ludwig Burger; Editing by Douglas Busvine and David Holmes)

12/07/2018 13:09

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