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Cancer Verdict

Monsanto Takeover May Become a Risky Endeavour for Bayer

| Editor: Alexander Stark

Following the verdict, Bayer's share dropped by as much as 12 %.
Following the verdict, Bayer's share dropped by as much as 12 %. (Source: Bayer)

With the verdict on August 10, Bayer might have to pay a heavy price for the takeover of Monsanto — not only because of the $ 289 million in damages Monsanto was ordered to pay to a former groundskeeper because of his terminal cancer.

Leverkusen/Germany; St. Louis/USA — Meanwhile it is fair to talk about a series of unfortunate events for the crop science business: Following a decision by the European Commission to ban the use of certain neonikotinoids as of 2019 and the close call on the renewed approval of glyphosate in the EU, a lawsuit against Monsanto ended with a verdict and once again suckerpunched the industry. The verdict passed by the Californian jury that glyphosate caused the cancer of Dewayne Johnson, could make the takeover of Monsanto a bitter pill for Bayer to swallow.

If the appeal announced by Monsanto fails, this could have a signal effect on pending lawsuits against the company. Altogether the company is facing lawsuits from about 5,000 people. An outlook, the stock market already reacted to by sending the Bayer share down by 12 % to the lowest level in two years.

Bayer remains optimistic nevertheless and believes that the transaction will pay off. Despite the verdict, the company is expecting that the acquisition will already make a positive contribution to core earnings per share starting in 2019, with a double-digit percentage from 2021 onward. From 2022, annual contributions of $ 1.2 billion to Ebidta before special items are planned from synergies.

Legal Remedies Against Jury Verdict Announced

That Monsanto would turn out ball and chain for Bayer this quickly, surely wasn’t expected by the managers in Leverkusen. They based their opinion on assessments and studies that concluded that glyphosate can be used safely. Bayer believes that the jury’s decision was at odds with scientific evidence, decades of real world experience and the conclusions of regulators around the world that all confirmed glyphosate is safe and does not cause non-Hodgkin’s lymphoma, the company announced following the verdict. The National Institutes of Health (NIH) recently reaffirmed glyphosate would not cause cancer. This is despite a review published by the International Agency for Research on Cancer with the WHO that classified glyphosate as “probably carcinogenic”.

Bayer Receives Approval for Acquisition of Monsanto from US Department of Justice

USA: Monsanto Takeover

Bayer Receives Approval for Acquisition of Monsanto from US Department of Justice

30/05/2018 - Bayer obtained conditional approval from the Antitrust Division of the United States Department of Justice (DOJ) for the proposed acquisition of Monsanto. However, the approval is tied to significant divestment conditions. read...

As announced by Monsanto, the company will pursue legal remedies. Bayer believes courts ultimately will find that Monsanto and glyphosate were not responsible for Mr. Johnson’s illness. The effects of this verdict already had severe ramifications on Bayer caused by the negative publicity of Monsanto and the plummeting share value of the company. Whether the planned growth targets announced by the company can be met and the negative perception of Monsanto will disappear together with its name, depends to a great deal on the outcome of the rule passed by the court of appeal.

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