Bayer: We'll survive

August 20, 2001 Posted: 1003 GMT

LONDON (CNN) -- Bayer has published an open letter in the German press to deny that the recent withdrawal of a key drug threatens the company's existence.

Speculation that rivals are set to bid for Bayer's pharmaceuticals arm has intensified in the past week. But Chief Executive Manfred Schneider said in the letter, published on Monday, that his strategy is unchanged.

"The withdrawal of the medicine has shaken our company – but not to its foundations," the German company's CEO wrote. "There is absolutely no reason to speak of a threat to the company's existence."

At Friday's close of trading, shares of drugs-to-chemicals maker Bayer had fallen about 27 percent since August 8, when the company said it was withdrawing cholesterol-lowering drug Baycol from sale in response to reports that linked the drug to at least 30 deaths.

The withdrawal prompted a number of U.S. law firms to file class-action suits against Bayer seeking damages for users of Baycol, which was also sold as Lipobay.

"We are surprised by the reaction of the financial markets, which evidently overestimate the lawsuits' chances of success," Schneider wrote in his letter.

British-based drug giant GlaxoSmithKline has approached Bayer's bankers and expressed interest in bidding for its pharmaceutical unit, the UK's Sunday Telegraph newspaper said in an unsourced report at the weekend, estimating the value of any offer to be up to $15 billion.

Bayer CEO Schneider said last week that two big drug makers had approached the Leverkusen, Germany-based company to express interest in some form of cooperation with its pharma business.

Though he said that selling the unit would not be his preferred option, he did not rule out forming a pharmaceutical joint venture, even if Bayer did not retain management control of the business. 

Bayer became the second blue-chip German firm in a week to defend itself by publishing an open letter in German newspapers with the aim of dispelling the appearance of a company in turmoil.

Last week, Deutsche Telekom CEO Ron Sommer placed a letter to shareholders in national newspapers in which he argued that the company was in good health, in contrast to the impression given by a 20 percent tumble in its share price over the previous week.  

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