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Bayer To Cut 12,000 Jobs Following Monsanto Purchase

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Bayer To Cut 12,000 Jobs Following Monsanto Purchase
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Earlier this year, German pharmaceutical company Bayer AG (OTC: BAYRY) announced its $60-million acquisition of Monsanto. The agrochemical company recently faced litigation tied to its weedkiller RoundUp.

What Happened

Bayer will cut roughly 12,000 jobs globally by the end of 2021, according to CNN Business. In addition to reducing the existing 118,000-person workforce, the company announced prospective plans to sell more assets, including Coppertone and Dr. Scholl’s.

Due to the deal with Monsanto, a majority of the jobs will be cut from Bayer's crop sciences division, CNN Business reported.

Why It’s Important

Bayer’s cost restructuring should reduce negative pressure and allow the company to focus on its core business. Jefferies' Ian Hilliker said in a note. 

The analyst considered the benefit of relinquishing other company assets like Dr. Scholl's and Coppertone. 

“Their disposal, along with the previously announce exit of dermatology, will now allow the consumer division to focus on the remaining parts of the business that are actually working," he said. 

With competition increasing in hemophilia, Bayer will not be utilizing its new Factor VIII manufacturing site in Germany and will focus on its U.S. facility instead, Hilliker said. 

"It has also highlighted it could dispose of a 60-percent holding it has in German site services provider Currenta.”

What’s Next

Earnings per share guidance remains in-line for 2022, Hilliker said. 

“Investors should now have more confidence that the 2022 CORE EPS expectations can be delivered. However, it does not change the fact that the sizable uncertainty from the glyphosate litigation could remain an overhang for at least next couple of years, leaving us on the sidelines until there is more clarity on the issue.”

Related Links:

Bayer Shares Fall After Jury Awards $289M In Roundup Lawsuit

Bayer CEO Predicts 'Great Value And Growth' In Company After Monsanto Acquisition

Latest Ratings for BAYRY

DateFirmActionFromTo
Aug 2018JefferiesDowngradesBuyHold
Aug 2016CitigroupUpgradesNeutralBuy
Dec 2014Morgan StanleyUpgradesEqual-WeightOverweight

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Posted-In: cnn Coppertone Dr. Scholl's Ian Hilliker JefferiesNews Analyst Ratings Media Best of Benzinga

 

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