NEWS OF TH E WEEK
BAYER TO EXIT CHEMICALS
BMS has 16,800 workers and annual sales of $15.6 billion from polymers such as polycarbonate and polyurethanes, making it one of the four largest chemical firms in Europe in its own right. But it has struggled to post strong returns in recent years. Although it accounted for 30% of Bayer’s sales last year, it contributed just 12% of pretax profits. Hiving off BMS will leave a life sciences firm with annual sales of $40.4 billion—more than half of which will be from the Bayer HealthCare pharmaceutical business—and 99,000 employees. Leverkusen will continue to be the headquarters site for both Bayer and BMS for the foreseeable future. Bayer says it will protect jobs in both organizations for the next five years. “We feel it has become increasingly difficult to adequately resource life sciences and MaterialScience in one group,” Bayer Chairman Marijn Dekkers told journalists during a conference call to discuss the move. Money raised from the sale of BMS will enable Bayer to increase R&D spending, make small acquisitions, and reduce debt following its $14.2 billion acquisition earlier this year of the over-the-counter drug business of Merck & Co., Dekkers said. Bayer floated its commodity chemicals business, Lanxess, in 2005. That company has struggled financially recently. However, BMS is number one or two in the world in the sectors in which it operates and “can generate significant value on a stand-alone basis,” Dekkers said.—ALEX SCOTT
RESTRUCTURING: German firm loses
patience with poor profitability from polymers headquarters
B
AYER PLANS TO float its polymer business,
known as Bayer MaterialScience (BMS), on the stock market as a separate entity in the next 12 to 18 months, leaving the German giant with only pharmaceutical and agricultural chemical activities. The spin-off will mark the end of an era not just for Bayer but for big German firms with both drug and chemical businesses, a strategy that dates back almost 150 years to the early days of the chemistry enterprise. Two other German majors, Hoechst and BASF, separated their pharma and chemical businesses in 1998 and 2001, respectively. Family-controlled Merck KGaA is the last German company to keep to a drugs-andchemicals strategy. BAYER
Bayer’s site in Leverkusen, Germany, will continue to be home for the chemical and life sciences companies following the split.
CURTAILING HFCs CLIMATE CHANGE: White House and industry pledge to pare back emissions of powerful greenhouse gases
T
House, chemical producers, and other businesses last week committed to slash emissions of hydrofluorocarbons (HFCs). These compounds, which replaced ozone-depleting chemicals including chlorofluorocarbon refrigerants, don’t directly harm stratospheric ozone but are potent greenhouse gases. The combined pledges will curb HFC emissions equivalent to 700 million metric tons of carbon dioxide through 2025, the White House estimates. Releases of HFCs are rising rapidly and contribute to human-caused climate change. Most HFCs have a potential for trapping heat in the atmosphere that is hundreds to thousands of times more per molecule than that of CO2. U.S. emissions of HFCs are expected to nearly double by 2020 and triple by 2030 unless industry and the federal government act, the White House says. In 2012, U.S. emissions of HFCs were equivalent to more than CEN.ACS.ORG
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SHU TTERSTOCK
To cut down on emissions, HFC makers are urging EPA to regulate how technicians handle these chemicals.
O HELP STAVE OFF climate change, the White
150 million metric tons of CO2, according to EPA figures. “We recognize that HFCs can have high globalwarming potential and that without a change in direction, their use and emissions will increase substantially, particularly in the developing world,” says Kathryn K. McCord, global business director of DuPont fluorochemicals. DuPont and another chemical maker, Honeywell, pledged to curb HFC emissions and are introducing alternative refrigerants that have significantly lower global-warming potentials than HFCs. The Obama Administration committed to fund R&D on cooling technologies that rely on chemicals other than HFCs or don’t use refrigerants at all. Also, EPA will consider issuing regulations, which HFC manufacturers want, to govern how air-conditioning and refrigeration technicians manage these substances. The White House says the new pledges are designed to build momentum for a global phaseout of HFCs under the Montreal Protocol on Substances That Deplete the Ozone Layer. More announcements about efforts to curb HFC emissions are expected at a summit in New York City this week convened by UN Secretary-General Ban Kimoon. Ban is hosting the meeting of world leaders to drum up high-level support for a new climate-change treaty that is to include greenhouse gas emissions controls for all nations. Negotiations on that treaty are expected to culminate at the end of 2015.—CHERYL HOGUE
SEPTEMBER 22, 2014
