Shareholders Vote “No Confidence” Over Bayer Monsanto Acquisition

Published on May 1, 2019 by Sandy Liebhard

Investors certainly aren’t happy about Bayer AG’s $63 billion Monsanto acquisition, judging by an overwhelming vote of “no-confidence” delivered at the annual shareholder meeting in Bonn, Germany last Friday.

According to the Financial Times, more than 55% of Bayer investors voted against ratifying top management’s actions during 2018, earning the German company its lowest shareholder approval rating in its postwar corporate history.

Monsanto Roundup Lawsuits Could Cost Bayer Billions

Shareholder furor over the Monsanto acquisition is understandable, as Bayer’s stock has slumped more than 30% since it took on the U.S-based agribusiness last year. The company inherited thousands of Roundup cancer lawsuits as a result of the move, and the litigation continues to grow by the day. The stock drops were especially dramatic after two trial losses resulted in jury awards totaling $158 million.

Damien Conover, an analyst who covers Bayer for Morningstar, told CNN that the company could face $2.2 billion in costs related to Monsanto Roundup lawsuits. In the worst-case scenario, those cost might exceed $14 billion.

On Monday, Moody’s said Bayer could handle paying around $5 billion to settle the Roundup cancer litigation, but warned that the company’s credit rating would suffer if such a settlement hit $20 billion.

Revolt Over Monsanto Acquisition Could Worsen

Last Friday’s no confidence vote isn’t legally binding. In fact, Bayer’s supervisory board unanimously backed the management team on Saturday, while several major investors said on Monday that the CEO and other top executives should remain in place, at least for now.

Other top shareholders, however, were frustrated with the supervisory board’s stance. According to Bloomberg News, those investors want Bayer to consider overhauling the board and take a “more forthcoming approach” to the Roundup cancer litigation. They also suggested that Bayer should conduct a new strategic review, perhaps with an eye towards breaking up the conglomerate into crop science and pharmaceutical companies.

Many now expect the shareholder revolt to worsen. On Wednesday, an anonymous source told Reuters that Bayer’s supervisory board has decided to convene an “extraordinary meeting” within the “next two or three weeks” to further address the growing crisis of confidence. Bayer has so far not commented on or confirmed that report.

Glyphosate Cancer Controversy

Glyphosate, the active ingredient in Roundup and many other Monsanto-marketed herbicides, is the most popular weed killer in the world.

But in March 2015, the World Health Organization’s International Agency for Research on Cancer (IARC) declared glyphosate a probable human carcinogen. The designation came after an independent review linked occupational glyphosate exposure to an increased risk of cancer, especially non-Hodgkin’s lymphoma and its various subtypes.

Monsanto vehemently disputed the IARC findings and mounted an aggressive campaign to discredit the group’s glyphosate review. According to Roundup cancer lawsuits, those efforts included ghostwriting favorable glyphosate studies and leveraging a cozy relationship with regulatory agencies investigating the herbicide’s health effects.

So far, however, Monsanto’s alleged machinations have done little to quell the controversy.

In March, for example, research published in “Mutation Research” suggested that glyphosate exposure increased the risk of non-Hodgkin’s lymphoma by as much as 41%. The authors of that meta-analysis reviewed all previous glyphosate-cancer studies, including the long-term Agricultural Health Study that Monsanto frequently cites as proof of its safety, but focused on groups with the highest rates of exposure.

On April 8th, the U.S. Centers for Disease Control’s Agency for Toxic Substances and Disease Registry said it couldn’t rule out a cancer link and issued a 257-page report suggesting more research was needed. Yet just weeks later, the U.S. Environmental Protection Agency reiterated its conclusion that glyphosate isn’t carcinogenic.