BAYRY Bayer Aktiengesellschaft (PK)

By Ruth Bender 

BONN, Germany -- Shareholders in Bayer AG let loose on Chief Executive Werner Baumann on Friday, warning that the company's acquisition of Monsanto Co. had put Bayer's future in jeopardy.

The German company's $63 billion purchase of Monsanto last year has opened it up to thousands of U.S. lawsuits alleging that the agricultural giant's Roundup weedkiller causes cancer. Investors gathered at Bayer's annual general meeting said Mr. Baumann and his fellow directors had underestimated the legal liabilities when preparing the takeover.

"Management infected a healthy Bayer with the Monsanto virus, is now playing doctor but has no healing drug at hand," said Ingo Speich, head of corporate governance at Deka Investment, which holds roughly 1% of Bayer.

"One has to ask critically if the due diligence was faulty," said Janne Werning, an analyst for environmental, societal and governance risks at shareholder Union Investment.

Two early court defeats in the Roundup cases have sent Bayer's share price plummeting and unnerved investors who struggle to gauge the size of the potential liability.

Mr. Baumann and Chairman Werner Wenning vigorously defended the Monsanto purchase and the company's due diligence.

"The acquisition was and is the right step for Bayer," Mr. Baumann said in his 24-page address to shareholders.

Meeting attendees had to step over dead bees laid out by environmental activists who stage protests every year.

The shareholder rebuke highlights the depth of the crisis Bayer faces. Investor confidence in the chemicals and drugs giant was shaken after two U.S. juries since August deemed Roundup responsible for the plaintiffs' cancer. Bayer has lost roughly a third of its market capitalization.

Bayer faces lawsuits from some 13,400 plaintiffs and investors fear that the share price won't recover until the company scores a win before a U.S. juries or on appeal. Bayer has appealed in the first case and has said it would appeal the second. Five more trials are set to take place in 2019.

Mr. Baumann is particularly exposed as the main architect of the Monsanto deal, which he brokered and pushed through just days after becoming CEO in 2016. the deal took two years to get regulatory approval.

Some large shareholders, including Union Investment and Deka, said they wouldn't back a motion that asks shareholders in Germany to endorse the directors' actions in the past year.

Even if such a motion fails to gain more than 50% of the votes, it carries no binding consequences under German law. A large rebuke would however be an embarrassment for management and could further undermine its standing in the investment community, analysts say.

It could also trigger a discussion about replacing management, though even some of the shareholders calling for a no-confidence vote warned that a change in leadership would exacerbate Bayer's crisis rather than help it.

Mr. Baumann said the share price losses were disappointing and hurt. He warned the litigation could extend over several more years.

(END) Dow Jones Newswires

April 26, 2019 11:36 ET (15:36 GMT)

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