Why Bayer shareholders must reject the discharge of the Boards

On 7 June 2018, Bayer closed the acquisition of Monsanto for USD 63bn, including debt, the biggest acquisition in Bayer’s history. According to the Company, the acquisition of Monsanto brought together two highly complementary businesses: Bayer’s chemical and biological crop protection portfolio and Monsanto’s expertise in the field of seeds and traits. Monsanto’s portfolio of established brands includes Dekalb, Asgrow and Roundup, among others.

As of 28 January 2019, lawsuits from approximately 11,200 plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Monsanto had been served in the United States.

Plaintiffs allege personal injuries resulting from exposure to those products, including non-Hodgkin lymphoma (NHL) and multiple myeloma, and seek compensatory and punitive damages. Plaintiffs claim, inter alia, that the glyphosate-based herbicide products are defective and that Monsanto knew, or should have known, of the risks allegedly associated with such products and failed to adequately warn its users. Additional lawsuits are anticipated, according to the Company.

Since the closing of the merger, Bayer’s market capitalisation decreased by almost 42% from EUR 92.3bn to EUR 53.7bn between 7 June 2018 and 29 March 2019. This was a critical destruction of shareholder value, ultimately caused by the Management Board’s decision to acquire Monsanto and the Supervisory Board’s approval thereof. In our view, both Boards underestimated the significant legal and reputational risks associated with the transaction.

ECGS therefore recommends to oppose the discharge of the Management Board and of the supervisory Board (agenda items 2 and 3) .


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