Bayer Wrestles with Bankrupting Monsanto to Evade Glyphosate Lawsuits' Burden
Bayer mulls Monsanto bankruptcy as a strategy to shed glyphosate litigation claims.
Wading through a troubled tide: The acquisition of Monsanto has become a millstone around Bayer's neck. Thousands of glyphosate lawsuits are looming, and the financial risk is uncertain. In the event of a settlement breakdown with the majority of plaintiffs, Bayer is reportedly mulling over a backup plan.
It seems Bayer is considering placing its U.S. subsidiary, Monsanto, into bankruptcy. According to confidential sources close to the situation, this move could lighten the weight of potential damages related to glyphosate [1][2][5]. The German pharmaceutical and agricultural conglomerate is contemplating this drastic step if their settlement negotiations with allegedly affected U.S. citizens fail.
Glyphosate, marketed in the States under the Roundup brand, is under scrutiny for cancer-causing potential. Although Bayer asserts the opposite, and global authorities do not categorize glyphosate as carcinogenic, there's mounting evidence to the contrary [1]. Since the buyout, Bayer has been hit with over 67,000 cases related to glyphosate, already shelling out around $10 billion (approximately €8.9 billion) and setting aside $5.9 billion in reserves for these legal battles [1].
Recently, a court in the Georgia state ordered Bayer to pay over $2 billion to a plaintiff alleging Roundup-induced cancer. Bayer has appealed the verdict. The majority of the remaining cases are currently in a Missouri state court, where Bayer is trying to negotiate a settlement [1].
Corporate tumult: If the settlement falters and the extent of the glyphosate lawsuits remains unclear, the Wall Street Journal reports that Bayer could resort to bankrupting Monsanto [1]. According to the sources, Bayer has already engaged a law firm and a consulting agency to evaluate this strategy. The company has declined to comment on the matter to the newspaper.
Bankruptcy for a subsidiary has been an option pursued by certain U.S. companies aiming to shed liability claims. This move can lead to protracted court battles and is legally contentious [1]. If successfully executed, this move would signal the end of Monsanto for Bayer. The $63 billion shelled out for Monsanto in June 2018 has vaporized, with substantial losses still accumulated [1]. When the buyout completed, Bayer's market value stood around €100 billion on the stock market. Today, that value has dwindled to a meager €25 billion [1].
References:[1] ntv.de[2] Reuters[3] NBC News[5] The New York Times.
The community and employment policies of Bayer may need to be reevaluated in light of the financial burden caused by the glyphosate lawsuits against their subsidiary, Monsanto. This situation, originating from the industry of agriculture and the finance sector, could potentially lead to a significant business decision – placing Monsanto into bankruptcy to alleviate potential damages.
If bankruptcy is the chosen path and it's successful, this corporate maneuver could signal the end of Monsanto as a subsidiary of Bayer, impacting both companies' employment policies and community standing. The failed acquisition and subsequent legal battles have significantly reduced Bayer's market value, leading to speculation about their future business strategies.
