Bayer’s 2018 acquisition of US crop science company Monsanto is the takeover that just keeps on taking. This week’s €2.5bn impairment charge adds to already extensive financial damage. It will reinvigorate activist demands for a break-up.
Bayer paid $65bn for Monsanto assets that included a glyphosate weedkiller called Roundup. Management initially underestimated the high cost of an accompanying health scare, as managements typically do. Allegations that Roundup is carcinogenic have prompted numerous lawsuits.
Bayer trades at a depressed enterprise valuation of about 7 times forward ebitda. Change may now be in the air. Werner Baumann, the chief executive responsible for the Monsanto purchase, has stepped aside after a long period of poor share price performance. Replacement Bill Anderson started last month. As a former Roche executive, his expertise is drugs, not weedkillers.