sc4mayor wrote:
^ I don't subscribe to the Wall Street Journal so if anyone has a summary that would be appreciated.
I really can't see this Roundup thing crashing Bayer, they're a lot bigger than Roundup. They just sold their Animal Health division for $7.6 billion too. Sentimental juries may be awarding big verdicts, but those same verdicts are getting substantially reduced. My guess in the long run is Bayer will eventually work out some sort of settlement deal for all these claims.
That doesn't change the fact that Bayer most certainly bit off more than they could chew when purchasing Monsanto, but I'd probably say there is a minimal chance it actually kills Bayer.
Intro of the article, I don't want to copy paste everything for copyright reasons:
"BERLIN— Bayer AG fought hard to take over Monsanto Co. Today, the $63 billion gambit ranks as one of the worst corporate deals in recent memory—and is threatening the 156-year-old company’s future.
Ten days after Werner Baumann became chief executive of Bayer in May 2016, he made a bid for Monsanto that was designed to turn the inventor of aspirin into the world’s biggest crop-science business.
Within weeks of the acquisition closing in June 2018, Bayer lost a lawsuit alleging Monsanto’s Roundup herbicide causes cancer. Another two defeats followed, landing Bayer with damage payments of more than $190 million. More cases are coming: A total of 18,400 plaintiffs have filed suits.
Bayer is appealing and says Roundup is safe. But its shares have dropped roughly 30% since the deal closed, making it one of the worst corporate deals by lost share value so far, in the ballpark of AOL’s combination with Time Warner and Bank of America ’s acquisition of Countrywide. Its market capitalization is now close to what the company paid for Monsanto alone, meaning the value of one entire company has almost entirely evaporated.
Shareholders withdrew confidence in Mr. Baumann at the last general meeting, a first in postwar Germany."
Further in:
"Bayer has defended the deal and proclaimed the safety of Roundup. It announced a restructuring late last year in a bid to boost profits, selling various assets and cutting 10% of its workforce. People familiar with the company said the moves were geared to boost investor confidence. Mr. Baumann said the plan was independent of the Roundup legal woes. The share price continued to fall.
At the company’s general meeting in April, shareholders withdrew confidence in Mr. Baumann in the first ever no-confidence vote in a CEO of a company listed on Germany’s main stock exchange. Mr. Wenning said at the time he deeply regretted the vote but stressed that the board stood behind Mr. Baumann. Bayer later hired an additional legal adviser and boosted oversight of its legal issues, bowing to pressure from investors.
With three verdicts issued against Bayer so far, analysts’ estimates of its total Roundup liability vary between €5 billion and €25 billion ($5.5 billion and $27.7 billion).
Third-quarter results released in July showed unexpected weakness in the crop-science business, which includes Monsanto, due to extreme weather.
With Bayer succeeding in getting two more trial verdicts substantially reduced and investors pinning their hopes on a fast settlement, shares have come up from June’s seven-year low. They’re currently down around 50% from their high of April 2015, when Bayer was the most valuable German company."