Companies in the news ... and how they were assessed
Bayer/monsanto: killer blow
Shares in the German pharma Bayer have plunged following a landmark “weedkiller cancer ruling” against Monsanto, the US agricultural giant that it bought in 2016, said Will Martin on Business Insider. Investors, who knocked 11% off the shares on Monday, are anxious that the ruling in favour of a school groundsman could prompt an avalanche of similar claims by users of Roundup and Ranger Pro, which both contain the allegedly carcinogenic chemical glyphosate. When Bayer bought Monsanto for $66bn in 2016, environmentalists dubbed it a “marriage made in hell”. The US firm, renowned for pioneering genetically modified crops, was vilified in the 1960s when its deadly herbicide, Agent Orange, was deployed in the Vietnam War. The risk now for Bayer is that farmers shun both Monsanto and Bayer products, “eroding the $200m of new yearly revenue streams” that the overpriced merger was supposed to deliver, said Neil Unmack on Reuters Breakingviews. Worse, with 5,000 similar legal claims pending, “simple multiplication would suggest” that Bayer, an s87bn group, is “exposed to more than $1trn of damages”. That’s probably “a long shot”: Berenberg analysts reckon “the actual worst case” could be some $5bn; Bayer is confident that it can win on appeal. “Still, this legal setback makes the logic of buying Monsanto even more weedy than it already was.”
Ikea in India: minus the meatballs
A dozen years after it first applied for permission to enter the Indian market, Ikea has opened its first store in Hyderabad, admitting customers “in batches of ten to 15 to prevent a stampede”, said The Guardian. The store, which will sell “locally relevant” products alongside Ikea’s standard Billy bookcases and Klippan loveseats, is the first of 25 outlets due to open across the country by 2025. Ikea has ditched its Swedish meatballs in favour of more locally acceptable versions made from chicken or vegetables, said Amy Kazmin in the FT. It has also shown a “determination to have 100% ownership of its Indian retail business”, rather than being “railroaded into a joint venture”. Ikea’s core proposition “seems likely to resonate with cost-conscious consumers”. But there is “no guarantee of a happy ending for foreign companies in India”, where “unpredictable policy changes have caused major headaches” for UK companies such as Cairn and Vodafone. Ikea’s additional “potential vulnerability” is its heavy dependence on imported goods. Indian fans “must hope the company’s promise to provide attractive, affordable home furnishings isn’t hit by rising tariff walls”.
English wine: walking on sunshine
Between April and July, the amount of sunshine in southern England has exceeded longterm averages by more than 30%. “Happy news for ice-cream vendors,” said Lex in the FT. “Even better for the 460 or so estates that produce wine”, including listed winemakers Chapel Down and Gusbourne, for whom poor weather has often thrown “a cork in the works”. That seems to be changing, with “significantly more sunshine during the growing season (April through to September) over the past two decades”. Vines planted are up by 150% in ten years alone. “Californian wines began to challenge their French rivals 40 years ago. Growing English chardonnay on the same latitude as Newfoundland remains a tougher challenge.” At least the weather trends are in the industry’s favour.