Bayer cuts dividends to legal minimum to tackle debt burden

As of Monday, the company’s shares, listed on the Frankfurt Stock Exchange, had fallen sharply to just 28.90 euros, reflecting a 50% decline in share value over the past year.

This also indicated a nearly 15% decrease in stock price (33.99 euros) since November 2023.  In June 2023, Bayer’s share price was around 52.33 euros.

This decline followed significant legal challenges and setbacks in drug development, placing increased pressure on Bayer’s leadership to articulate a comprehensive turnaround strategy.

Bayer’s Monsanto lawsuit

In January 2024, Bayer AG’s subsidiary, Monsanto, finalized settlements in nearly 100,000 Roundup lawsuits in the United States, amounting to an expenditure of approximately US$11 billion.

Despite these settlements resolving nearly 80% of the pending Roundup claims, a substantial number—potentially around 40,000 to 50,000 lawsuits—persist.

These cases revolve around individuals attributing their cancers to the controversial product, marking one of the company’s most significant trial losses related to the herbicide.

The ongoing legal challenges against Monsanto highlight concerns about Roundup’s carcinogenic properties.

Bayer faced a major legal setback in November last year when a Missouri Circuit Court ruled that Monsanto must pay a total exceeding US$1.5 billion to three former users of Roundup, a landmark decision that added to the company’s legal woes.

Further complicating matters, on 26 January this year, a Philadelphia jury awarded $2.25 billion in damages in a case linking Roundup to a cable technician’s blood cancer, marking the largest verdict yet in the extensive litigation over the popular Monsanto weed killer.

In anticipation of such legal challenges, Bayer had allocated more than $10 billion in 2020 to settle approximately 125,000 cases, many of which were consolidated in California.

According to Fortune, these recent developments intensify the challenges for Bill Anderson, who assumed the role of chief executive in June 2023.

Singapore sovereign fund Temasek invested in Bayer in 2018

In April 2018, Singapore’s sovereign fund Temasek Holdings decided to invest in Bayer.

It bought a 3.6 per cent stake for 3 billion euros (approximately over S$4.3 billion ) at 96.77 euros per share at the time.

The money is used as part of Bayer’s plan to takeover Monsanto. Together with its existing holding in Bayer, Temasek would then own about 4 per cent in Bayer after the transaction.

By June 2018, with Temasek’s help, Bayer successfully acquired Monsanto to become the biggest seed and agricultural chemical maker in the world.

However, since the acquisition, lawsuits have been mounting in the US whether Monsanto’s  “Roundup” causes cancer.

Two months after Temasek helped Bayer to acquire Monsanto, in a landmark verdict in August 2018, Monsanto was ordered by a San Francisco court to pay US$289 million in punitive damages and compensatory damages. Bayer’s subsidiary, Monsanto, appealed several times, but lost.