Bayer's Roundup cancer costs froze on their Monsanto merger

Bayer has to pay $ 81 million in compensation to a man claiming that Roundup weedkiller caused cancer, a jury decided on Wednesday. In a similar verdict last year, the sum was $ 289 million, reduced to $ 78 million by appeal. Since the first judgment, Bayer's shares have lost 40% of the value – and there are still about 11,300 such cases waiting in the wings.

Anyone asking the question: Was it worse for Bayer to buy Roundup maker Monsanto? 19659002] Someone, including activist Bayer shareholder Christian Strenger, actually says it was. String has granted a loathing belief in Bayer's regime over the German giant's General Assembly next month, and it contains a large number of complaints about "almost complete inability to deliver the key goals presented by [Bayer CEO Werner] Baumann in May 201[ads1]6 to Monsanto The acquisition. "

But before we look at Strenger's argument, we rewind to examine the rationale behind the $ 66 billion of a deal.

Why Bayer Bought Monsanto

Bayer bought Monsanto as part of recovery as a life science firm focused on health and agriculture. When the deal was proposed in 2016, the competitive relationship in agricultural science shifted dramatically – Dow and DuPont merged, as was ChemChina and Syngenta. Bayer wanted to become a major player in seeds and genetically modified crops, and Monsanto offered just that.

Monsanto was also an early mover in the growing "digital agricultural arena", explains Sanjiv Rana, editor of Informa Protection Analysis outfit Agrow. "The acquisition gave Bayer an advantage in the field," he said.

But there were problems walking.

First, the mission raised antitrust problems in the United States – only after the companies agreed to the Justice Department's demand that Bayer sell its Roundup competing Liberty herbicide business, along with its cotton, canola, soybean and vegetable seed businesses. , various research and development projects and Bayer's own digital farming business. The chemical company BASF was the lucky buyer and paid $ 9 billion.

And then it was the glyphosate problem. The International Agency for Cancer Research (IARC), a body of the World Health Organization (WHO), published a report in early 2015 which said that pesticides, which are Roundup's active ingredient, were "probably carcinogenic to humans." Another report from the WHO and the UN then said that glyphosate was "unlikely to pose a carcinogenic risk to humans from diet exposure." This was in line with other findings in the case. But eating roundup remnants is one thing and injecting things over many years – which both successful plaintiffs did – is another.

The IARC report, which states that glyphosate was probably carcinogenic, was partly based on studies by farmers who had been exposed to the drug. So why have regulators not cracked? "Many regulatory bodies originate mainly from industrial data from toxicological studies that are not available in the public domain," the IARC says in a question and answer to the study. "The IARC systematically collects and evaluates all relevant evidence available in the public domain for independent scientific review." The IARC, not a regulatory authority, sees itself in various sets of data from those considered, as industrial studies are avoided.

Stranger's argument

Strings, which is a prominent German government expert, told Fortune the most important question that cancer cases continue is if "[Monsanto’s marketing operation did] is too small for warning signs."

" Mr. Baumann of Bayer always refers to 800 opinions that glyphosate is a safe product, Strenger says. "But the big problem is how it was used and was sold properly with sufficient warning signs."

A jury awarded the plaintiff Dewayne Johnson $ 289 million after He claimed that Monsanto's weedkiller caused cancer, a judge later cutting that price to $ 78 million. (Photo by JOSH EDELSON / AFP)

Strenger argues in his confidence that Bayer did ruled the legal risks of the 3,600 outstanding glyphosate-related lawsuits already underway before the deal was closed, partly because Monsanto was banned by the US The Justice Department provides Bayer with complete information on all cases.

"[Bayer] should have insisted," he said. "These were not military secrets. Bayer should have told Monsanto:" Either you get DOJ to allow disclosure, or we should not continue the transaction. "" Strenger suggests, however, after two years of dealing with issues such as the agreement's antitrust implications, the Bayer regime. may have been tempted to be "lenient with a proper analysis of the legal situation."

Bayer rejects that notion. A spokesman insists that Bayer's regime during the Monsanto acquisition carried out this risk assessment based on an information and update process that was sufficient in all respects for an acquisition of such a scale. "

" Of course, in connection with the acquisition, the board has also considered the risks associated with Monsanto's glyphosate business, the spokesman says. "This risk assessment clearly showed that when used as directed, Monsanto-containing products containing glyphosate are safe. Based on regulatory authorities worldwide and scientists, the board considered the legal risks associated with using glyphosate so low." [19659020] Werner Baumann has been Managing Director of Bayer AG, speaking at the annual press conference. The Bayer Group presents the financial statements on February 27, 2019. Photo: Oliver Berg / dpa (Photo by Oliver Berg / Image Alliance via Getty Images) “/>