Bayer to slash dividend by 95% to reduce its debt

Bayer AG (OTCPK:BAYZF) plans to shrink its dividend by 95% as it works to reduce debt. Bayer shares rose about 1% in Germany on Monday after the dividend cut was disclosed.

The German healthcare and crop sciences conglomerate said it will reduce its dividend policy to pay out the legally required minimum for three years, according to a statement on Monday. Bayer will cut its dividend to 11 euro cents ($0.12) for fiscal year 2023, down from €2.40 the previous year.

“One of our top priorities is reducing debt and increasing flexibility,” Bayer CEO Bill Anderson said in the statement. “Our amended dividend policy, which considered investor input and was not taken lightly, will help us do so.”

The dividend cut comes as the company and investors deal with Bayer’s (OTCPK:BAYZF) long struggle to recover from its ill-fated purchase of Monsanto and legal liabilities associated with its Roundup brand.

Anderson took over in June amid a push from activist Bluebell Capital and others for the company to separate its crop sciences business from its drug business. Activist investor Jeff Ubben reported a more than $400 million stake in Bayer in January 2023 and pushed for the company to hire a chief executive from outside the company.

Bloomberg last month reported that Bayer (OTCPK:BAYZF) is leaning against breaking up the company. Bayer’s business model – with consumer health, crop science, and pharma divisions – has long been criticized by several investors who complain that the divisions do not belong together and there would be more value created by splitting them up.