Bayer investor sues top executives for 'disastrous' Monsanto deal

A Bayer AG investor sued the board and other top company officials, claiming the “disastrous” 2018 acquisition of Monsanto Co. eroded the company’s share value by saddling it with potentially billions of dollars in liability from Roundup lawsuits.
 

Bayer AG’s board and other top officials were sued by an investor who claims the “disastrous” 2018 acquisition of Monsanto Co. saddled the company with potentially billions of dollars in costly lawsuits over Roundup herbicide.

The German chemical giant “has been engulfed by a tsunami” of litigation alleging Monsanto’s Roundup causes cancer, eroding Bayer’s share value, Rebecca Haussmann said in a suit filed Friday in New York state court in Manhattan. She demanded compensation and punitive damages, as well as disgorgement of pay for executives who helped arrange the deal.

Bayer last month estimated it faces about 48,600 U.S. plaintiffs in Roundup cases, up from 18,400 in July. While the company insists the herbicide is safe, it has lost some early cases at trial. It may cost $10 billion to $13 billion to settle the claims, according to estimates by Bloomberg Intelligence analyst Holly Froum.

“These verdicts caused Bayer’s market capitalization to collapse by over $60 billion, wiping out the entire ‘value’ of the Monsanto acquisition, damaging Bayer and its shareholders,” Haussmann said in the suit. “The acquisition is now ranked as one of the worst corporate acquisitions in history.”

Bayer shares are down 31% since the company completed the $63 billion takeover of Monsanto, prompting some investors to demand the resignation of Chief Executive Officer Werner Baumann.

The company has acknowledged that the Roundup litigation may force it to sell assets, issue new equity or borrow money at unfavorable terms. Last month, Bayer said Chairman Werner Wenning would leave in April, before his term expires.

The company didn’t immediately respond to a request for comment. Francis A. Bottini Jr., whose firm is among several representing Haussmann, said Bayer went ahead with the deal despite opposition from former CEO Marijn Dekkers, who left the company in 2016.

“At the time, there were obviously lawsuits filed, so there were not just red flags, but they were on notice of the allegations,” Bottini said. “This is the only way to recover the harm to the company.”