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Our company this week, the truly remarkable German group Bayer, has for so long been at the center of the global pharmaceutical sector that it's hard to imagine what it would have been without the brand.
It's been 120 years since the company's chemists invented aspirin and most people have been, at one time or another, grateful for this invention since its launch in stores. Ironically, it may take industrial quantities of aspirin in the conference room of Bayer after the difficult, so ambitious ambition of the group, to redefine the global activity of chemistry.
Bayer's big move in 2016 was to spend a staggering 66 billion euros on the controversial US group Monsanto, which created unexpected surprises for the giant.
First, he caught the unwanted attention of the formidable activist shareholder Elliott and his relentless CEO, Paul Singer. Elliott purchased 8% of Bayer's shares and, if so, any guide that will lead to further engineering, including spin-offs and restructuring, including layoffs.
In the public mind, Monsanto stands for Genetically Modified (GM) products – a company in which Bayer is already involved. Immediately after the takeover came into effect, Bayer wisely abandoned the Monsanto brand. But another Monsanto brand, the highly successful Roundup, a product that kills weeds, is provoking controversy and frightening regulations in US courts.
Bayer 's global operations generate a turnover of 35 billion euros, while its market value is 63 billion euros.
In 2016, the group appointed Walter Baumann as CEO. He promised a policy of "evolution, no revolution".
Four weeks after his appointment, he surprised the market by offering a record bid for Monsanto, once infamous in Vietnam for his defoliant agent, Agent Orange.
Bayer sees this agreement as part of the broader reorganization of the global agro-chemical sector. It is the last of three major food groups that is reshaping global agriculture, with conglomerates such as Dow / DuPont and Chemchina / Syngenta.
As might be expected, the takeover has been closely scrutinized by regulators as the company creates the world's largest seed and pesticide business. She got the EU approval only after agreeing to sell her vegetable seeds, her pesticides and her food technology to BASF for 8 billion euros.
Despite its disposals, Bayer is emerging as the world's largest seed and agrochemical company.
This combination allows the group to control more than 25% of the world's seed and pesticide supply.
The company completed the Monsanto acquisition in mid-2018. Two months after its acquisition, a bomb exploded when Bayer found himself in court to defend himself against charges brought by Roundup users. A gardener from a California school said that Roundup had caused his cancer and that he had received $ 290 million in damages. As a result, he lost more than 11 billion euros worth of Bayer market value.
Although the company is appealing, investors fear that the lawsuit will lead to further lawsuits.
For some, this takeover was a bit of an arrogant empire building that resulted in the loss of one-third of Bayer's shares. This is not surprising, as the purchase turns into a real quagmire. Its shares are trading just above its five-year low, hovering in the € 60 highest shares and the multiple of the current price gains of 11.
In order to win the favor of the market and counter the critics as well as skeptical investors, Baumann has announced 12,000 job cuts and considered transferring the animal protection division of the group.
There is no doubt that Paul Singer and his friends may have other ideas. It might be better to wait for US courts to clarify things before investing.
Nothing in this section should be considered as a recommendation, explicit or implicit, to purchase any of the actions mentioned.
Independent Irish
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