How Monsanto’s Roundup Herbicide Went From Bayer Asset to Burden

(Bloomberg) -- Bayer AG just agreed to pay as much a $10.9 billion to settle most of the legal headaches inherited with the takeover of Monsanto two years ago. That marriage, which followed a two-year courtship and cost Bayer a quarter of its value, didn’t start out as rocky. Here are key highlights of its history:

May 23, 2016, Bayer Pounces on Monsanto

As Werner Baumann took the helm of Bayer, mergers and acquisitions were already reshaping the agricultural-products industry. Feeling the pressure, Bayer approached Monsanto, itself a target after failing to buy a rival. Shares immediately slumped on concern Bayer would be financially stretched by such a giant deal.

Sept. 14, 2016, Deal Is Clinched

After bumping its offer price, Leverkusen, Germany-based Bayer secured a takeover accord that would turn it into the world’s biggest supplier of seeds and pesticides. The agreement included a $2 billion breakup fee.

Dec. 1, 2017, First U.S. Nod

The transaction started off well. The Committee on Foreign Investment in the U.S. had taken a long, hard look at China’s acquisition of Switzerland’s Syngenta on national security grounds. By contrast, Bayer sailed through its review unscathed.

April 26, 2018, Bayer Forced to Sell Prize Assets

Antitrust regulators insisted that Bayer sell chunks of its existing agro-chemical and seed businesses worth 7.6 billion euros ($8.6 billion) in return for approval. Germany’s BASF SE, which had been waiting in the wings, jumped at the opportunity. Bayer had to part with prime assets, creating a much stronger competitor right in its backyard.

May 29, 2018, Last Regulatory Hurdle Clears

U.S. antitrust regulators became the last major authority to approve the deal after the biggest divestment package ever in a U.S. merger enforcement case, paving the way for the takeover to be completed the following week.

Aug. 10, 2018, First Legal Cracks Appear

Just two months after Bayer clinched the deal, a court in California ruled in favor of a former school groundskeeper who alleged Monsanto’s glyphosate-based weedkillers, including the flagship Roundup brand, had been the cause of his cancer. The first lawsuit to go to trial resulted in $289 million in damages. Baumann and his legal team were aware of a controversy around glyphosate, but banked on a lack of scientific evidence establishing Roundup’s risks. Bayer, like Monsanto before it, insisted the popular herbicide was safe.

March 27, 2019, Bayer Loses Second Trial

Another Roundup setback took place when a federal court awarded compensation and punitive damages totaling more than $80 million to a 70-year-old California man who became ill after spraying the herbicide on his property for decades. Bayer again vowed to “vigorously defend” Roundup, but it was an ominous sign, ramping up the pressure to settle.

April 26, 2019, Bombshell at Bayer Meeting

A bruising moment at Bayer’s annual shareholder meeting, when Baumann and other managers lost a vote of confidence. In what’s usually a formality at such gatherings, 55% of investors expressed their mistrust in the CEO, prompting an immediate supervisory board meeting. Similar rejections have cost German CEOs their jobs, but Baumann soldiered on with the backing of Chairman Werner Wenning.

May 13, 2019, Another Trial Loss

In the third U.S. trial to make it to court, a Californian couple who had been using Roundup for three decades were awarded $2 billion in damages, bringing Bayer’s shares down more than 40% since the deal was cemented. The company called the ruling “unjustifiable.” It’s appealing all three lost suits.

July 30, 2019, Lawsuits Skyrocket

With the number of glyphosate lawsuits swelling to about 18,400 in the U.S., Baumann said he’d consider a “financially reasonable” settlement. Management also engaged in a mediation process ordered by a district judge in California.

March 23, 2020, Bayer Stock Hits Rock Bottom

With mounting lawsuits, Bayer shares reach 47.50 euros, the lowest level in almost eight years. Estimates for the cost of damages vary, with some pegging it as high as $20 billion. Like Volkswagen AG’s fines for cheating on diesel emission tests in 2017, glyphosate was fast becoming a painful blow to another icon of German industry.

June 24, 2020, Settlement Announced

The company agreed to make a payment of as much as $10.9 billion to resolve about three-quarters of the existing Roundup lawsuits and address potential future ones, capping months of efforts to bring its herbicide woes to a close.

©2020 Bloomberg L.P.