Bayer's logo on a wall in Leverkusen, Germany. Picture: REUTERS/WOLFGANG RATTAY
Bayer's logo on a wall in Leverkusen, Germany. Picture: REUTERS/WOLFGANG RATTAY

London/Frankfurt — Bayer’s largest shareholder, fund manager BlackRock, will not support the German company’s management in a key vote at its annual general meeting on Friday, say two people familiar with the situation.

About €30bn ($34bn) has been wiped off the pesticides and drugs firm’s market value since August, when a US jury found Bayer liable because Monsanto, which it bought for $63bn in 2018, had not warned of alleged cancer risks linked to its weedkiller Roundup.

Bayer suffered a similar courtroom defeat in March and more than 11,000 plaintiffs are claiming damages.

BlackRock, which latest filings show owns 7.2% of Bayer’s voting rights, plans to either abstain from or vote against ratifying the management board’s actions during the year under review, the sources said.

The largely symbolic vote of confidence “will send a message to the board” that BlackRock is not happy with the way Bayer’s management handled the Monsanto deal, one of the sources said.

Recent defeats in US courts, which Bayer is appealing against, have shed a new light on Bayer’s assessment of the legal risks it took with the Monsanto deal, the source added.

A vote to ratify the board’s actions features prominently at every German annual general meeting. It has no bearing on management’s liability, but is seen as a key gauge of shareholder sentiment.

Bayer’s management, led by CEO Werner Baumann, could see an embarrassing plunge in approval ratings, down from 97% at its 2018 annual general meeting, which was held shortly before the Monsanto takeover was closed in June.

Sharp criticism

Asset management firm Deka, among Bayer’s largest German investors, said over the weekend it would vote against ratifying management’s action, having voiced sharp criticism earlier in April.

Also in April, shareholder advisory firms Institutional Shareholder Services (ISS) and Glass Lewis recommended investors not to give the executive board their seal of approval.

Singapore state investor Temasek and Norway’s oil fund, Bayer’s next two biggest shareholders after BlackRock, both declined to comment on their voting intentions.

Major Frankfurt-based asset managers DWS and Union Investment also would not disclose their plans.

Approval ratings of more than 95% have long been the norm at German annual general meetings but international investors have become more critical over recent years.

In a recent low for a company leadership team, former Deutsche Bank co-CEOs Anshu Jain and Juergen Fitschen scored approval ratings of 61% during the bank’s 2015 annual general meeting. Both announced their resignation within weeks.

Company filings showed in April that Bayer’s supervisory board sought law firm Linklaters’ expert opinion for reassurance that management had complied with its duties when acquiring Monsanto.

Nonexecutive chair Werner Wenning has come out in strong support of the top executive team and its decision to pursue the Monsanto deal. Sources have said the Wenning himself was a driving force behind the transaction.

The US Environmental Protection Agency, the European Chemicals Agency and other regulators across the globe have found that glyphosate, the active ingredient in Roundup, is not likely carcinogenic to humans.

However, the World Health Organisation’s cancer arm in 2015 reached a different conclusion, classifying glyphosate as “probably carcinogenic to humans”.