Bayer loses first case over Monsanto’s glyphosate, investors abandon it (-10%)

Very hard momentum for Germany-based Bayer: A Californian judge some days ago ordered the company to pay a $289m refund for the damage caused by an herbicide containing glyphosate, marketed by the recently acquired Monsanto. The huge refunding could be followed by as many as 5,000 new claims for compensation: Bayer, thereby, risks a damage like in 2001, as the Lipobay scandal forced the company to pay a total $1bn compensation.  Bayer’s shares soon reacted to the announcement by losing 10% of their value (Frankfurt) in very few hours. According to analysts, this is an excessive backwash, since it accounts for a capitalization drop of approximately $10bn. Indeed, it is reported that Bayer will be due to pay fines totaling up to $5bn. Suffice it to say that its competitor Johnson & Johnson some months ago was ordered to pay $4.7bn to compensate for the damages caused by its baby talcum powder and Merck & Co. in 2007 had to refund $4.9bn for health damages associated to its painkiller Vioxx. The market is now wondering whether Monsanto’s acquisition, paid $63bn and strongly supported by the new CEO Werner Baumann, has been a major PR mistake by the Leverkusen’s group.

(Sources: Bayer, Börsen-Zeitung)