Bayer Stock Price has Increased 50% Since June of 2019
In April of 2019 Bayer had purchased the U.S. agriculture giant Monsanto Co. and inherited the 42,000 lawsuits that came with it. Bayer CEO Werner Baumann was on the defense as he had become Germany's first chief executive to lose a vote of confidence by shareholders. Fast forward to now and Bayer and plaintiff lawyers are approaching a deal in which Bayer would pay a total of roughly $10 billion for current and future plaintiffs who allege the company’s Roundup herbicide causes cancer.
Expectations that the company could soon find a reasonable way out of its legal morass have helped pull Bayer’s shares up roughly 50% since they hit €52 ($57) last June.
Absent any progress, Mr. Baumann could face another no-confidence vote, this one being harder to survive. Strong support from the company’s nonexecutive directors helped Mr. Baumann survive the last vote.
The company has brought in experts in several categories to either join or advise the Board and that has been part of the success seen in the last year. To monitor Roundup lawsuits, in June, a lawyer with expertise in mass torts was brought in to advise the board. In October, it added an agriculture expert to its board. All these measures were demanded by investors, including activist investor Elliott Management Corp.
Ingo Speich, head of sustainability and corporate governance at Bayer investor Deka Investment, said the CEO also addressed operational concerns by selling Bayer’s animal health unit and consumer-care brands on time and at good prices.
“Is he responsible for the legal issues? Yes. But he also showed that he can keep the business together,” said Mr. Speich, nine months after blaming Mr. Baumann for “infecting a healthy Bayer with the Monsanto virus.”
“Last year people talked about the lawsuits all the time, now it’s mostly business as usual,” the person said.
The lawsuits aside, Roundup is facing competition from a determined rival , Corteva Inc. as it woos farmers away from Bayer products.
For Deka’s Mr. Speich, Mr. Baumann can't be fully judged on the Monsanto purchase until two years from now, once the agriculture business is fully integrated. Mr. Baumann has said repeatedly that buying Monsanto was the right move, saying Bayer will be positioned as leader in a market with enormous growth potential given the world’s fast-growing population.
“A settlement would of course be positive but I think it will grant Mr. Baumann only a short respite,” said Markus Mayer, analyst from Baader Bank.