Bayer sued by shareholders over Monsanto acquisition

19:05 PM | February 2, 2021 | Robert Birkett

German law firms representing Bayer shareholders are suing the company for what it claims was a failure to warn shareholders adequately of the risks from pending lawsuits against Bayer’s acquisition target Monsanto. The share price of the Bayer group including the Crop Science and pharma divisions has almost halved since the takeover of Monsanto in June 2018 in the wake of lost lawsuits and mounting litigation against Monsanto for alleged health risks from the legacy business’s herbicide, Roundup (glyphosate). Bayer rejects the lawsuits as “unfounded”.

Business weekly WirtschaftsWoche reports that two firms are seeking compensation in a pilot lawsuit before a Cologne court on behalf of various investors.

They accuse the company of “breaches of duty under capital market law”, claiming that the “risks of the purchase were not adequately presented to the shareholders.” One of the firms believes that the case before the court could develop into a “model investor proceeding”, citing a previous trial involving the car manufacturer, Volkswagen (VW). “One lawsuit then becomes representative of all others negotiated.” That firm was reportedly involved in the VW proceedings. The second firm is representing shareholder Kingstown Capital Management, which seeks €37 million ($45 million at the current rate) in compensation from Bayer, according to the WirtschaftsWoche report.

Bayer says that it will defend itself against what it perceives as unfounded allegations. “We believe that our company and its leaders have at all times acted in accordance with the obligations and applicable laws regarding the allegations made in the lawsuits, and that Bayer conducted appropriate due diligence regarding the acquisition process,” it says. “This has also been confirmed by the studies of independent experts.”

Bayer lost three cases brought against the legacy business, starting shortly after it had acquired Monsanto.

Litigation and proposed costs

In August 2018, a California jury awarded a former school groundskeeper some $279 million in a similar case. The state judge overseeing that trial reduced the award to some $78 million. That case has gone to an appeal in which the plaintiff is seeking the reintroduction of the original penalty, while Bayer is counter-suing for the case to be dismissed. In March 2019, a federal jury convened by the US District Court for the Northern District of California awarded another California resident some $80 million. The following July, a federal judge cut that award to just above $25 million.

As of October last year, lawsuits from approximately 60,300 plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Monsanto had been served upon the Bayer business in the US. Plaintiffs allege personal injuries resulting from exposure to those products, including non-Hodgkin lymphoma (NHL) and multiple myeloma, and seek compensatory and punitive damages. By the same date, nine Canadian lawsuits relating to Roundup seeking class action certification had been served against Bayer.

Bayer has moved to settle the bulk of outstanding lawsuits for some $10.9 billion and that settlement is pending before US District Judge Vince Chhabria. The company reached a settlement deal in June 2020 involving most of the total approximately 125,000 known filed and unfiled claims, and to put in place a mechanism to resolve potential future claims. As of last October, the company had an agreement covering some 88,500 claimants with ongoing discussions over deals with thousands more.