Bayer faces strong legal headwinds, gains shareholders backing despite AGM rebuke

It would be interesting to see Bayer’s due diligence for its acquisition of Monsanto since even before Bayer’s $63 billion acquisition of Monsanto, the latter was facing lawsuits related to its Roundup weedkiller.

According to two of Bayer’s largest German investors, moves to overhaul the top management at the drugmaker will have to wait to avoid any further upheaval.

This backing for Bayer’s Chief Executive Werner Baumann comes in the wake of the drugmaker facing an unprecedented rebuke at its annual shareholder meeting last Friday, wherein a majority of investors cast a vote disapproving its top management’s actions.

“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 Janne Werning, an analyst at Germany’s Union Investment. “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”.

Since August 2018, nearly $33 billion (30 billion euros) have been wiped off from Bayer’s market capitalisation following a U.S. jury’s finding that Bayer is liable for damages since Monsanto had not warned of alleged cancer risks linked to its weedkiller Roundup.

Bayer now faces more than 13,000 plaintiffs, who are all claiming damages.

On Monday, Bayer shares traded 1.9% lower by 0725 GMT.

Bayer plans to appeal the verdicts and in its defense has pointed to global regulators’ findings that the use of glyphosate is in fact safe.

Glyphosate is the active ingredient in Monsanto’s Roundup weed killer.

According to Ingo Speich, a fund manager at Deka Investment, a change of top management would only compound the chaos.

“It can’t be in anyone’s interest to see the daily operations being neglected, on top of all the existing chaos,” said Speich at the AGM.

Deka and Union had been among top-20 investors who cast a ‘No’ vote in the company’s annual AGM poll to ratify management’s business conduct during the year under review.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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