Bayer has closed a billion dollar settlement, so many US lawsuits are over. But in the discussion with critics you need empathy, and you can’t buy it.
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Werner Baumann has been head of the pharmaceutical and agrochemical group Bayer since May 2016. He made an unprecedented false start. The $ 63 billion acquisition of Monsanto turned into a disaster. For him personally and for the group. With weed killers such as glyphosate, dicamba and genetically modified seeds, Monsanto stands for industrial agriculture like no other. With the purchase of the US company, Baumann not only damaged Bayer’s image. The Dax group also lost billions in value on the stock exchange. The CEO has a lot to make up for.
The comparison, the details of which the company announced on Thursday night, once again shows Baumann’s perfectionism. It is a whole bundle of agreements that should also eliminate the anger about the pesticide Dicamba and the chemical PCB. In total, Baumann is rid of the legal hassle in the United States for a good twelve billion dollars that he bought himself into with the purchase of Monsanto. Up to $ 9.6 billion will be spent on the approximately 125,000 glyphosate lawsuits that have been filed and not yet filed. In this case, dividing does not help much, because this amount is also used to pay the generous fees of the US prosecutors, and not every plaintiff receives the same amount.
Twelve billion dollars is a huge sum. But Bayer can do this, from the sale of divisions such as veterinary medicine, from current income. And Bayer saves, the company cuts thousands of jobs, and the employees bear the burden of the takeover. And if there is still a lack of money, the company will get it on the capital market, for example by issuing bonds.
The billion dollar comparison solves legal problems, but the image will stick to Bayer
Baumann, who had been the Group’s chief financial officer for a long time, calculated and now chose the lesser evil. That is good and smart. Scientifically, the manager at Glyphosat thinks – with an already stubborn way – on the safe side. The comparison is not an admission of guilt or wrongdoing. There is no reason for Baumann to withdraw pesticides containing glyphosate from the market. But he does not want to burden Bayer for years, as long as the legal skirmishes could drag on with an uncertain outcome. The manager has removed uncertainties and wants to appease investors. They don’t like insecurities. This has been shown by the development of the share price in recent years. The share price reacted violently to every legal decision in the United States, even if it was made in the first instance.
However, Baumann not only freed Bayer from the comparison, but above all freed himself. It was a good four years ago that the takeover talks began, and the takeover was completed almost two years ago. Lost time. Baumann wants to get started right now, he wants to show what he’s really capable of.
With the comparison, however, he is largely only rid of the legal trouble. The image damage remains. Baumann’s statements at the nightly investor conference do not give the impression that he cares very much about the criticism of environmentalists, beekeepers or organic farmers about the strategy of the group. For managers, corporations like Bayer are not the problem, but the solution to many of mankind’s problems: hunger, poverty, global warming.
Baumann does not want to give up glyphosate, nor does he want to develop seeds that are genetically modified in such a way that the products from his own house cannot harm them. The comparison does not remove the discussion in society about how the growing world population can be fed, how fields, meadows and pastures should be cultivated, and how climate-friendly agriculture should look like. You will go on and become more sharp because the problems grow. Critics will continue to demonstrate against the group and not only against Bayer, but also against other agrochemical groups. The big investors won’t let up. At the annual general meetings and elsewhere, you will ask how sustainable Bayer’s business model is.
It depends on his answers whether Baumann can repair the image of the group. This takes longer than the legal review of the takeover. Social discourse requires empathy. You can’t buy them for any money in the world. Baumann still has to practice there.
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