Bayer Consolidates U.S. Roundup Into Ruveon, Eyes Structural Changes
Bayer's Strategic Moves and Market Implications
By Ozan Ergenay
July 2 (Reuters) - Bayer <BAYGn.DE> said on Thursday it was consolidating its U.S. Roundup business in a new unit, less than a week after scoring a major legal victory that blocked thousands of state-court lawsuits related to the weedkiller.
Formation of Ruveon and Investor Reactions
The creation of the unit, Ruveon, is fuelling investor hopes that the German group could move closer to structural changes, including spin-offs or divestments, long sought by some shareholders.
Analyst Perspectives on Potential Structural Changes
Sebastian Bray of Berenberg said the move "may prompt investor speculation of an eventual separation of some agriculture activities from Bayer".
Stefan Wulf of brokerage ODDO BHF said setting up its U.S. glyphosate business separately would help Bayer "separate or divest the business in the future should ongoing or additional litigation make the business ... unattractive."
Ruveon's Role and Bayer's Crop Science Strategy
Bayer said Ruveon will remain a Bayer business and oversee all aspects of U.S. sales of Roundup, whose key ingredient is known as glyphosate, including pricing, production and logistics.
Background: Bayer's Acquisition of Monsanto
Bayer bought Roundup as part of its $63 billion purchase of agrochemical company Monsanto in 2018, which became a major liability due to lawsuits accusing Bayer of failing to warn users that Roundup's active ingredient causes cancer.
Share Price Impact and Market Response
Shares in Bayer rose as much as 5.7% to their highest level since August 2023. They were also supported by a Deutsche Bank upgrade, with the bank saying a breakup of Bayer's portfolio was "a question of when and how, rather than if".
Legal Developments and Safety Claims
Bayer, the only U.S. maker of glyphosate, has said that decades of studies have shown the key Roundup ingredient is safe and does not cause cancer.
Last week, the U.S. Supreme Court sided with Bayer in its bid to limit the legal fallout in a case that is part of years-long litigation over the product.
Future Outlook for Ruveon and Bayer
"Ruveon is expected to be a more nimble and well-positioned player within its commodity-based market, which requires a specialized approach to address competitive dynamics," Bayer said in a statement.
The company added that the consolidation of the business was part of its Crop Science division's five-year plan to drive growth, resilience and profitability.
(Reporting by Ozan Ergenay in Gdansk, Bipasha Dey in Bengaluru and Thomas Seythal in Berlin, writing by Christoph Steitz; editing by Sherry Jacob-Phillips, Alexander Smith and Louise Heavens)
