Bayer faces shareholder revolt over Monsanto buyout and weedkiller lawsuits

By PharmaCompass

2019-05-02

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A popular weedkiller — Roundup — that fell into Bayer’s lap when it bought out Monsanto in June 2018 for US$ 63 billion is wreaking havoc at the German drugs and chemicals giant. The company is facing a huge shareholder revolt as the purchase has put Bayer at risk from thousands of cancer lawsuits in the US tied to the weedkiller. Moreover, since the Bayer-Monsanto deal for Roundup closed in June last year, the Bayer stock has tanked 40 percent.

In an unprecedented rebuke, over 55 percent of voting shareholders did not endorse the actions of the management during the company’s annual meet last week. The shareholders vented their anger over the stock price slump, and the risks associated with the lawsuits. About US$ 34 billion (Euros 30 billion) have been wiped off Bayer’s market value since August.

The shareholders questioned the wisdom of this purchase when two US juries sided with men who claimed that glyphosate, the key ingredient in Roundup, caused them to develop cancer. However, Bayer is appealing both rulings. For now, the problem seems apocalyptic, as Bayer faces glyphosate lawsuits from roughly 13,400 US plaintiffs.

“Due to the continued negative development at Bayer, high legal risks and a massive share price slump, we refuse to ratify the management board and supervisory board’s actions during the business year,” Janne Werning, representing Germany’s Union Investment, a top-20 shareholder, said in prepared remarks.

However, three of Bayer’s largest German investors said Bayer’s embattled management needs to stay at the helm to avoid further upheaval.

“A hasty replacement of the CEO would only increase the risk of a break-up and therefore can’t be in the interest of long-term oriented investors such as Union Investment,” said Werning.

According to a report published in Fortune, Baumann has nine months to prove he shouldn’t be kicked out over the Monsanto acquisition.

“The scale of the litigation risks won’t become clearer before next year, that’s why we think it’s fair and necessary to grant top management more time,” Werning said.

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