As Monsanto Roundup Lawsuits Loom, Bayer Agrees to Merger & Acquisitions Review

Published on March 2, 2020 by Sandy Liebhard

Facing growing pressure from investors angry over mounting Monsanto Roundup lawsuits, Bayer AG has agreed to review its rules for approving mergers and acquisitions.

Prominent Shareholder Pushed for Bayer Review

Bayer acquired U.S.-based Monsanto for $63 billion in June 2018. In doing so, the company inherited thousands of lawsuits that allege glyphosate in Roundup weed killer caused cancer. The first three cases have since gone to trial in California, with every single jury ruling for plaintiffs. Although their combined jury awards initially totaled more than $2 billion, all three trial judges ultimately reduced the jury verdicts to comply with the state’s limits on punitive damages.

Bayer’s share price has fallen about 25% since the first Monsanto Roundup trial concluded in August 2018. The debacle also resulted in a rare rebuke from investors during the company’s annual shareholder meeting in Bonn, Germany last April.

According to FiercePharma, Bayer announced on Friday that it had reached an agreement with corporate governance expert Prof. Christian Strenger, a Bayer shareholder and former CEO of DWS Investment, Germany’s largest asset manager, to conduct the merger and acquisitions review. Strenger apparently proposed the audit during last year’s shareholder meeting, but the motion was defeated.

With more than 48,000 Monsanto Roundup lawsuits pending in courts around the United States, Bayer has now agreed to meet Strenger’s demand. Prof. Hans-Joachim Böcking of the University of Frankfurt will conduct the assessment.

Bayer Annual Report Warns of More Damage from Monsanto Roundup Lawsuits

Bayer also released it’s 2019 Annual Report on Friday, warning that it may be forced to sell assets, issue new equity or borrow money at unfavorable terms because of the ongoing Monsanto Roundup litigation.

“We may incur considerable financial disadvantages from the pending lawsuits or potential future cases if, for example, we are ordered to pay compensatory and possibly punitive damages, or if we assume payment obligations under out-of-court settlements,” the report stated.

Although Bayer continues to insist glyphosate is safe, the company is participating in court-ordered mediation aimed at settling the Roundup litigation. Last month, Kenneth Feinberg, the high-profile attorney tapped to lead the negotiations, expressed optimism that the effort would lead to an agreement to resolve up to 85,000 pending and future claims. Media reports indicated Bayer was considering a Monsanto Roundup settlement in the neighborhood of $10 billion.

Last Wednesday, Bayer’s chairman, Werner Wenning announced he would be stepping down in April. Norbert Winkeljohann, who has served on Bayer’s supervisory board since 2018, will assume the chairmanship. Prior to his tenure with Bayer, Winkeljohann was head of auditing firm PricewaterhouseCoopers Europe SE.