Bayer stock falls after $289M Monsanto verdict
Bayer’s stock slumped 11.3 percent Monday, three days after a California jury awarded $289 million to a former groundskeeper who said the popular weedkiller Roundup gave him terminal cancer.
The stock drop sent a cautionary signal to the company that acquired Monsanto, the maker of the weedkiller, in June for $63 billion. The merger created the world’s largest seed and agrochemical company, marrying Monsanto’s dominance in genetically modified crops with Bayer’s pesticide business.
The verdict poses a new challenge for Bayer in its quest to combat contempt swirling around Monsanto by consumer, health and environmental advocates. For years, the company has drawn sharp criticism and allegations about the health hazards caused by Roundup, and Monsanto faces thousands of lawsuits that assert its product is linked to cancer diagnoses.
Monsanto’s reputational problems are now Bayer’s problems, said Anthony Johndrow, a corporate reputation adviser. Lawsuits against Monsanto are nothing new, Johndrow said, adding that Bayer risks souring sales of its other products because of the public perceptions of Monsanto.
“Any stakeholder is going to be asking right now, ‘why would they buy Monsanto with this stuff hanging over its head?’ ” Johndrow said. “I think that’s a question they have to answer, and they have to answer it sooner than they planned to.”
Bayer had previously announced that the Monsanto brand name would be dropped as soon as this month. In a call with reporters in June, Liam Condon, president of Bayer’s crop science division, said the move to lose Monsanto’s name was part of a wider strategy to win back consumer trust. Separately, Bayer Chief Executive Werner Baumann said the company would “aim to deepen our dialogue with society” and “listen to our critics.”
“The more important point now, once we change the company name, is that we talk about what the new company will stand for,” Condon said on the June call. “Just changing the name doesn’t do so much. We’ve got to explain to farmers and ultimately to consumers why this new company is important for farming, for agriculture and for food, and how that impacts consumers and the environment.”
Monsanto has long maintained that its products don’t cause cancer, and the company doubled down after Friday’s verdict. Monsanto Vice President Scott Partridge said in a statement that the verdict “does not change the fact that more than 800 scientific studies and reviews ... support the fact that glyphosate does not cause cancer, and did not cause Mr. (Dewayne) Johnson’s cancer.”
Partridge said Monsanto would appeal the decision “and continue to vigorously defend this product.”
In 2015, the World Health Organization said glyphosate, the herbicide in Roundup widely marketed by Monsanto, was likely carcinogenic and could cause cancer in humans.