Bayer focus shifts from German headquarters back to US courts

As Bayer management digs in against a growing shareholder rebellion over the acquisition of Monsanto, attention will shift from the German company’s headquarters back to US courts.

That’s where the German pharma and chemicals giant faces 13,400 lawsuits claiming that Monsanto’s Roundup weedkiller causes cancer. Even as it fights the cases, the company’s shareholders handed chief executive officer Werner Baumann an unprecedented rebuke last week.

At a fractious, 13-hour gathering in Bonn on Friday, more than 55% of shareholders voted against absolving Mr Baumann and other managers of responsibility for their actions in the $63bn takeover last year.

Bayer’s board circled the wagons afterward, saying it maintained full confidence in Mr Baumann. Several top investors consider the move a sign that Bayer is unwilling to address shareholder concerns, according to people familiar with the situation. The vote was non-binding, but other German CEOs have lost their jobs even after securing more support than Mr Baumann.

Several large investors said, however, that they would prefer the chief to remain in place because a change to Bayer’s management board could further delay a resolution to the US litigation and any strategic review.

Investors want Bayer to consider an overhaul of the board, take a more forthcoming approach in dealing with the US litigation and conduct a sweeping review -- including a potential breakup of the conglomerate into crop science and pharmaceutical companies, said the people familiar with the situation.

Management’s fate may ultimately lie in the hands of US courts, where Bayer has already lost two Roundup cases and lawsuits are proliferating through multiple channels.

In one set of proceedings, a US federal judge this month ordered Bayer to pursue mediation, asking the company to try to settle legal challenges that have wiped more than €35bn off the market value.

Separately, a state court in California is hearing a case brought by a couple in their 70s who have cancer. The jury is expected to rule as soon as next month.

Bayer denies that Roundup causes cancer and the company has been holding out hope for a court win that would give Mr Baumann some breathing space as the company hones its legal response to the swelling wave of litigation. A third loss, however, could force the company to accelerate talks on a global settlement, which analysts have said could top $5bn.

Bloomberg