Bayer plans £8bn spending spree

Bayer, the German chemicals giant, will spend £8bn over the next three years to strengthen its position as one of the world's leading chemical companies, Manfred Schneider, its chief executive, said yesterday.

Spread over research and capital investment, some of the war chest will be used for acquisitions to reinforce Bayer's operations in selected sectors. One-fifth of expenditure will be in the US, with Asia the other priority region.

Mr Schneider said the aim was to increase worldwide sales in the medium-term from the current equivalent of £17bn to more than £21bn, and the return on sales to at least 10 per cent.

After a bumpy ride through the recession, Bayer is enjoying a surge in profits as it benefits from the stronger economic environment and a radical rationalisation programme.

Pre-tax profits for 1994 are expected to reach £1.3bn, and Mr Schneider expressed confidence that both sales and earnings would increase in the current year.

He indicated that Bayer intended to expand its activities in the US still further after last year's purchase for £650m of the North American over-the-counter business of Sterling Winthrop. The US market held a very promising future for the group, he said.

Late last year, Mr Scheider confirmed Bayer was in negotiations for a further takeover, and was planning an important co-operative venture, both of which were expected to be completed in early 1995. He said then that there were no plans for acquisitions in pharmaceuticals.

Yesterday, he focused on what he called the significant opportunities to be found in the businesses covering pharmaceuticals, consumer care and diagnostics. The goal was to increase the contribution of this segment to total group sales from a current 26 per cent to 30 per cent by 2000.

Mr Schneider was yesterday introducing the Bayer group to the US media following the acquisition of Sterling Winthrop, which also gave the German company back the rights to its name and trademarks. These had been confiscated and sold to Sterling after the First World War.

Bayer's US subsidiary, Miles Inc, will be renamed Bayer Corporation on 1 April.