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Bayer AG (OTCPK:BAYZF) plans to cut its dividend by 95% as it works to reduce debt. Bayer shares rose about 1% on Monday in Germany after the dividend cut was revealed.
The German health and agricultural sciences conglomerate stated this will reduce its dividend policy to pay the legal minimum for three years, according to a report statement on Monday. Bayer will reduce its dividend to 11 euro cents ($0.12) for fiscal 2023, down from 2.40 euros a year earlier.
“One of our top priorities is to reduce debt and increase flexibility,” Bayer CEO Bill Anderson said in the statement. “Our revised dividend policy, which took into account investor input and was not taken lightly, will help us achieve this.”
The dividend cut comes as the company and investors navigate Bayer's (OTCPK:BAYZF) long struggle to recover from its ill-fated purchase of Monsanto and the legal liabilities associated with its Roundup brand.
Anderson took over in June amid pressure from activist Bluebell Capital and others for the company to separate its agricultural sciences business from its drug business. Activist investor Jeff Ubben reported a stake of more than $400 million in Bayer in January 2023 and pushed for the company to hire a CEO from outside the company.
Bloomberg reported last month that Bayer (OTCPK:BAYZF) is leaning toward breaking up the company. Bayer's business model – with consumer health, crop science and pharmaceutical divisions – has long been criticized by several investors who complain that the divisions do not go together and that more value would be created if they were split.
