Bayer chief hits out at US legal system after weedkiller fight

The head of German conglomerate Bayer has launched a scathing attack on the US legal system, claiming that companies operating in America are preyed on by litigation lawyers and at risk from juries required to rule on complex issues.

Bayer is embroiled in a lengthy legal battle in the US stemming from its $63bn acquisition in 2016 of seedmaker Monsanto, a controversial deal that has left the German group exposed to litigation over an allegedly cancerous weedkiller Roundup.

Since the Monsanto acquisition, which was resisted by some shareholders, Bayer has been pursued through the US courts by thousands of claimants alleging their use of the weedkiller left them with cancer.

Bayer maintains the product, whose main ingredient is glyphosate, is safe and says scientific research supports that view. The German group has already paid out $9.5bn in settlements and earmarked another $6.4bn as it seeks to draw a line under the bruising legal battle.

“We as a company, as well as the whole industry, are eventually totally at mercy of an industry of litigation lawyers in the US,” Werner Baumann said on Tuesday at his final press conference as chief executive.

“This is particularly problematic as the appeals courts are not reassessing the fact. Generally, you have to deal with lay juries which at times have to rule about very very complex issues,” he added.

Baumann, who will be succeeded in June by former Roche executive Bill Anderson, said that “this is quite a problem for all companies. Every company can be hit.”

He defended his record at Bayer, saying he was “very proud” of his seven years in the top job as well as his 35 years in various other roles at the pharma and agrochemicals conglomerate.

“We’re active in the right fields, since health and nutrition are fundamental human needs,” Baumann said.

But after several years in which Bayer shares have lagged behind rivals, the company now faces growing calls to either break up or embark on a radical overhaul.

“Baumann is handing over a company in need of redevelopment,” said Markus Manns, a fund manager at Union Investment, which according to S&P Global Market Intelligence holds a 1.3 per cent stake in Bayer.

Bayer’s consumer health unit should be spun off because it “obviously does not have the valuation in the Bayer conglomerate that it deserved”, said Manns.

The criticism of the US courts came after Bayer warned that its operating profit would fall this year after climbing by just over a fifth to €13.5bn last year.

Earnings before interest, taxes, depreciation and amortisation, adjusted for one-offs and currency swings, are expected to be between €12.5bn and €13bn this year, the company said. The outlook sent shares in Bayer down as much as 4.6 per cent in Frankfurt trading.

Baumann said on Tuesday that he was “very, very confident” that Bayer would resolve its legal fights in the US and that “we have already taken the necessary balance-sheet provisions”.

But the Monsanto acquisition, which is regarded by analysts as one of the most destructive of shareholder value in recent decades, will define his tenure at the top.

Almost five years since the deal closed, Bayer remains worth less than it was when rumours of the transaction first leaked.