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MarketScreener Homepage  >  Equities  >  Xetra  >  Bayer AG    BAYN   DE000BAY0017

BAYER AG

(BAYN)
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Real-time Estimate Quote. Real-time Estimate Tradegate - 04/07 03:59:59 pm
56.84 EUR   +1.88%
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Bayer : Agrees to New Review of Monsanto Purchase

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02/27/2020 | 05:30am EDT

By Ruth Bender

BERLIN -- Bayer AG said it would strengthen external oversight of its due diligence in deal making in its latest concession to shareholders after its 2018 acquisition of Monsanto swamped it with a tide of lawsuits and sent its stock crashing.

Bayer said Thursday that it would allow an independent expert to review its rules for scrutinizing major deals and would publish the results on its website in late March.

The concessions come a day after the German chemical and pharmaceutical company said Chairman Werner Wenning was stepping down earlier than planned and would be replaced by Norbert Winkeljohann in April.

Bayer has also agreed to a new review of how it evaluated risks in its $63 billion purchase of Monsanto, which shareholders have criticized as overly risky after the acquisition plunged the company into a major legal battle over Roundup weedkiller, which thousands of Americans allege causes cancer.

The moves highlight Bayer's efforts to appease investors ahead of its shareholder meeting in April. By then, many shareholders expect Bayer to deliver progress on resolving the lawsuits. The company has been exploring a comprehensive settlement.

There was no sign of such progress on Thursday, as Bayer reported another rise in the number of plaintiffs. As of Feb. 6, it faced a total of 48,600 plaintiffs, up from 42,700 reported three months ago. Bayer argues that the weedkiller is safe and has appealed verdicts in the three cases it has lost so far.

Bayer has been negotiating with plaintiff attorneys since last summer to try to reach a deal to settle the claims. Bayer lost three jury verdicts in the U.S. last year and has since come under pressure from investors to find a way to put to rest the legal fight that has been dragging down its share price and prompted shareholders to withdraw confidence in Chief Executive Werner Baumann at the group's annual meeting last year.

Shareholders have accused Mr. Baumann and Mr. Wenning of underestimating the risks of the Monsanto purchase. Christian Strenger, an individual shareholder in Bayer and a German expert on corporate governance, filed a motion at last year's meeting for a special audit of whether directors acted dutifully in handling the Monsanto litigation risks.

The motion failed to obtain a majority but Bayer nevertheless agreed to take some of the recommendations on board in an attempt to assuage investors ahead of the shareholder meeting. Some analysts expect the meeting to deliver another rebuke for Mr. Baumann if Bayer can't show it is making progress on settling the lawsuits.

Bayer said it hired an independent lawyer to review the legal advice it commissioned before the Monsanto acquisition about the legal risks of the deal. The lawyer and mass-torts expert James B. Irwin concluded that the legal opinions, on which Bayer based its decision to purchase Monsanto, appropriately analyzed the risks. Bayer will also publish this report on its website.

Bayer last year had already hired external lawyers to examine whether Bayer's management acted dutifully in their due diligence of the deal. Bayer Thursday said those reports, which found no breach of duty, would also be published in a more detailed form.

Mr. Baumann reiterated Thursday that Bayer would agree to a settlement only if it can bring a "reasonable conclusion" to the entire legal battle, meaning it must also include a solution to prevent lawsuits against Bayer in the future, a key sticking point in settlement talks.

"We will pursue the three appeals through all judicial instances if necessary," Mr. Baumann said in a statement.

One issue Bayer and plaintiff lawyers have been sparring over is how many plaintiffs in total would be eligible for compensation in a settlement, according to people familiar with the negotiations. Some lawyers have estimated the total amount of plaintiffs at some 100,000, a figure Bayer dismissed as speculative and not reflecting the actual number of served cases.

Separately, the Monsanto purchase helped Bayer post a rise in profit and sales for its latest quarter, broadly meeting analyst forecasts and helping the group reach its full year goals.

Net profit in the quarter swung to EUR1.41 billion ($1.54 billion) after a loss of nearly EUR4 billion in the same period last year, helped by the integration of Monsanto and a recovery in crops science. Sales in the quarter rose 3.8% to 10.26 billion in the fourth quarter, driven by the group's blockbuster drugs, blood thinner Xarelto and eye treatment Eylea and Latin American crops science business.

Write to Ruth Bender at Ruth.Bender@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
BAYER AG 2.69% 57.29 Delayed Quote.-23.38%
SIEMENS AG 3.02% 84.48 Delayed Quote.-29.64%
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Financials (EUR)
Sales 2020 44 675 M
EBIT 2020 8 006 M
Net income 2020 5 013 M
Debt 2020 29 902 M
Yield 2020 5,13%
P/E ratio 2020 12,1x
P/E ratio 2021 11,4x
EV / Sales2020 1,90x
EV / Sales2021 1,76x
Capitalization 54 809 M
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 80,75  €
Last Close Price 57,29  €
Spread / Highest target 92,0%
Spread / Average Target 41,0%
Spread / Lowest Target -50,8%
EPS Revisions
Managers
NameTitle
Werner Baumann Chairman-Management Board
Werner Wenning Chairman-Supervisory Board
Wolfgang U. Nickl Chief Financial Officer
Paul Achleitner Member-Supervisory Board
Reiner Hoffmann Member-Supervisory Board
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