Glyphosate suspected to be the cause – four-year-old has cancer – mother is suing Monsanto
– Four-year-old has cancer – mother is suing Monsanto
Five years after Bayer’s mega-deal, there is nothing but trouble with the biotech group. One case hit the headlines in the United States.
On September 14, 2016, Bayer was finally there. After months of bargaining, the US seed giant Monsanto accepted the over 60 billion dollar takeover offer from the Leverkusen-based agrochemical and pharmaceutical company.
Bayer boss Werner Baumann made history – he dared to make the largest acquisition that a German company abroad has ever made. But five years later the results are sobering. Wave of lawsuits, image crisis, billion-dollar risks, record loss – Monsanto has so far mainly caused problems for Bayer. And the consequences of the mega-deal continue to bother the group.
In the United States, a new case involving the glyphosate weed killer Roundup is making headlines: the mother of a boy suffering from cancer has sued Bayer subsidiary Monsanto. In the lawsuit filed with a court in Los Angeles on Monday, the mother blames Monsanto for the fact that her son has so-called Burkitt lymphoma, a rare and particularly aggressive type of cancer.
According to the complaint, the child was exposed to the weed killer when the mother sprayed it on her property. The boy was only four years old when he was diagnosed with Burkitt’s lymphoma in 2016. This lymphoma is one of the fastest growing types of tumors.
The complaint states that experts concluded that Roundup was a “major factor” in the development of the boy’s cancer. The mother’s lawyers accuse Monsanto of “having known about the link between glyphosate-based herbicides and cancer for decades”.
Legal difficulties underestimated
The confidence was so great. “The combined company is very well positioned to participate in the agricultural sector and its significant long-term growth potential,” Bayer announced on the day of the acquisition agreement. In fact, through the acquisition, the Dax group suddenly rose to become the largest supplier of seeds and pesticides.
Bayer promised that the acquisition would be worthwhile for the shareholders. Despite warnings of Monsanto’s bad reputation and several lawsuits, for example regarding the weed killer glyphosate, Bayer was ready to dig deep into its pockets – and offered the Americans a premium of 44 percent on their share price.
But the major project turned out to be a difficult undertaking from the start. Obtaining permits from the international supervisory authorities took much longer than initially assumed. In addition, the competition watchdogs only gave their approval under far-reaching conditions. Bayer had to sell business shares worth billions to the competition so that the market power of the merged group would not become too great.
Despite the strong concessions and legal conflicts that were taken over with Monsanto, Bayer management stood behind the deal and vigorously defended the financial feat against critics.
In view of major mergers in the agrochemical sector – such as the merger of Dow Chemical and Dupont to form the industry giant Dowdupont and the takeover of Swiss rival Syngenta by Chemchina – it was important not to lose touch.
The legal trouble that Monsanto was supposed to cause was apparently underestimated in Leverkusen. The US company has already faced lawsuits over the pesticide glyphosate, which some studies consider to be carcinogenic. After a first litigation failure in August 2018, a real glyphosate avalanche broke out over Bayer.
In addition, there were other legal waste from Monsanto, such as the herbicide dicamba or the chemical PCB, which US plaintiffs hold responsible for contaminated water and brain damage.
Price loss of over 50 percent
For the Bayer Group, legal disputes in the United States quickly developed into a dominant issue. On the capital market, the wave of lawsuits put the company under great pressure; in the first year after the takeover, Bayer’s share price fell by a good 37 percent.
In the meantime, the market value has fallen even further and was most recently at 53 billion dollars. Since the takeover was agreed five years ago, the share price loss has even totaled over 50 percent.
Baumann, shareholders missed a historical lesson in April 2019 because of the debacle over the Monsanto acquisition. As the first incumbent board member of a DAX group, his discharge was refused at the annual general meeting.
In the meantime, the anger has subsided, but the many lawsuits keep the company and its investors in suspense. Last year the legal burdens Bayer broke a minus of 10.5 billion euros – and thus the highest loss in the more than 155-year history of the company.
Hoped for a release from the Supreme Court
In the meantime, it had looked as if Bayer could tick off all glyphosate processes in the USA in one fell swoop, with a large comparison worth billions. But meanwhile the group has had to change course again.
Because a judge did not accept an important part of the compromise negotiated with plaintiffs, Bayer is now relying on a decision by the US Supreme Court to turn around. In mid-August, the company filed an application for a revision of a judgment in one of the three glyphosate lawsuits that had been concluded in the United States – all of which Bayer lost.
A supreme court decision in favor of the group would have a signal effect and would amount to an exemption. But it would be a long way to get there. So far it is unclear whether the Supreme Court will even accept the case.