A 99.66 percent majority of Bayer’s shareholders have approved the planned spin-off of Lanxness, which is taking over the German company’s basic specialty and fine chemicals operations as well as the manufacture of rubber, polyurethane and other polymers that have a reached a certain maturity. Each shareholder of Bayer will receive one of Lanxness’ 73 million-plus shares for every 10 shares that he or she holds in Bayer.

Lanxness will have annual sales of more than €6 billion and it will employ about 20,000 persons. Results published last week show that Lanxness turned around to an operating profit (Ebit) of €46 million before special items in the 3rd quarter ended Sept. 30, or €64 million better than in the same period a year ago, thanks in part to strong cost controls. Its sales increased by 4.6 percent to €1,471 million during the period.

Axel Claus Heitmann, CEO of Lanxness is aiming for an operating margin before special items of 7 percent for this year, rising to 9-10 percent in the next couple of years, as compared to a pro forma margin of 4.9 percent in 2003.

Heitmann is working with four other high-level executives on its board of management. They are Ulrich Koemm, Martin Wienkenhöver and Matthias Zachert. The new company should start trading separately from Bayer on the stock exchange early in 2005, but its establishment is retroactive to July 1, 2004. It inherits net debt of around €1.3 billion, including pension commitments and a €200 million mandatory convertible bond issued by Lanxess and bought by Bayer in October to favorably influence its credit rating.

The idea of the spin-off was decided at Bayer’s annual stockholders’ meeting in April as the best way to separate the Bayer Group’s different activities. From now on, Bayer is to concentrate on activities with high growth and innovative potential such as health care, nutrition and high-tech materials. Bayer has instituted different and leaner management structures at Lanxess, designed to maximize cost containment rather than product innovation. The company will seek acquisitions in the future to boost its position in certain market niches, to cut costs and to exit from weaker areas. Bayer and Lanxess will jointly operate existing chemical park sites in the future. Lanxess will use large sections of Bayer’s main site in Leverkusen.

Lanxess’ supervisory board will consist of eight representatives of stockholders and eight members representing the employees. Rolf Stomberg, who has held managerial positions at the group for many years, will act as chairman until Lanxess’ first annual shareholders’ meeting.