Healthcare giant Bayer is to float most of its chemical and polymers businesses as a new separate entity.
The company made the announcement after growing speculation in the German media that it was planning to sell-off the two divisions.
Instead Bayer intends the new sister company to be listed on the German stock exchange by early 2005.
It said it has not yet decided whether there would be a spin-off to shareholders, or an initial public offering.
Many analysts believe Leverkusen-based Bayer has decided upon the float, which could raise more than 2bn euros ($2.3bn or £1.4bn), to boost its ailing core pharmaceutical business.
This has endured a difficult time, and reduced sales, ever since the withdrawal of its high profile anti-cholesterol drug Lipobay (known as Baycol in the US) back in 2001, due to patient health fears.
This downturn is likely to continue until new products hit the market in 2006/2007, with even Bayer chairman Werner Wenning admitting recently that the business is facing a dry spell in the coming three years.
The flotation of the chemicals and polymers businesses would release a treasure chest of funds for the Leverkusen-based company to reinvest in pharmaceuticals, be it new drug development or acquisitions.
Bayer chairman Werner Wenning said: "We intend to position our pharmaceuticals division as a mid-size European pharmaceuticals business, we are convinced that this will generate the greatest value for our shareholders."
The company added that in the future the division will focus more strongly on Europe, though without neglecting the important markets in the US and Asia.
Other analysts believe the flotation would be a consolation prize for Bayer shareholders, who have seen the company try - and fail - to find a pharmaceutical partner over the past two years.
Silke Stegemann of Landesbank Rheinland-Pfalz said she feared the company had missed its chance.
"In our opinion the Leverkusen company lacks a clear strategic direction," she added.
Bayer, which back in August reported a 3.3% fall in sales, will be announcing its third quarter figures on Tuesday.