Bayer has been under pressure from shareholders as it faces lawsuits said to involve more than 13,000 plaintiffs alleging that its glyphosate-based weedkiller is carcinogenic; last month, a jury reportedly awarded more than $2 billion to a couple from California, which led to a plummet in Bayer's share price. The business has lost around 40% of its market value over the past year, leaving shareholders understandably nervous.
In response to its legal woes, Bayer has decided to create a special supervisory board to monitor the lawsuits and consult on legal strategies. It has hired John Beisner, a consumer litigation specialist and partner at law firm Skadden, Arps, Slate, Meagher & Flom, to advise the board.
Although this move boosted Bayer's shares by 8.5% on Thursday, its problems are far from over. Having already lost three lawsuits, the company could pay as much as $10 billion to settle the remainder, per Bloomberg. Bayer is also reportedly set to lose patent protection for two of its blockbuster drugs. Combined with shareholder discontent, this could lead to questions regarding the company's future strategy.
Bayer has already announced a cost-cutting drive that is estimated to result in annual savings of €2.6 billion, although CEO Werner Baumann maintains that it is not related to Monsanto. The plan includes getting rid of 12,000 jobs and selling units including its animal health business, which could be worth up to €8 billion. Bayer has also agreed to sell its sunscreen products range to Beiersdorf for $550 million, and the company is seeking similar deals for other consumer health brands.
While Elliott welcomed Bayer's strategy, the Paul Singer-led firm—which has holdings in other big European names such as alcoholic beverage producer Pernod Ricard and telecommunications provider Telecom Italia—believes more can be done to improve the company's position. In its announcement Wednesday, the firm said that Bayer has a "potential value realisation opportunity that is in excess of €30 billion."
The statement could be referring to the investor's reported desire for a separation of Bayer's pharmaceutical operations from its crop-science division. And Elliott has a habit of getting what it wants.
Featured image courtesy of Bayer
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