On October 21, 2020, the Honorable Richard Seeborg of the United States District Court for the Northern District of California appointed the Sheet Metal Workers National Pension Fund and the International Brotherhood of Teamsters Local No. 710 Pension Fund (together, the “Pension Fund Investors”) as Lead Plaintiff and Cohen Milstein Sellers & Toll PLLC as sole Lead Counsel for the proposed Class of investors in this putative securities class action against Bayer and current and former executives Werner Baumann, Werner Wenning, Liam Condon, Johannes Dietsch, and Wolfgang Nickl (collectively, “Defendants”) for alleged violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5.
Specifically, the complaint filed alleges that in connection with its acquisition of the Monsanto Company (“Monsanto”), Bayer misrepresented the rigor of its due diligence and the nature of the risk presented by Monsanto’s flagship product, Roundup weed killer. Bayer investors – including the Pension Fund Investors – incurred significant losses after jury trials against Monsanto found in favor of the plaintiffs, including finding that Roundup was a “substantial factor” in causing plaintiffs’ non-Hodgkin’s lymphoma, and leading to jury awards totaling hundreds of millions of dollars.
On May 23, 2016, Bayer, a multi-national pharmaceutical and life sciences corporation, announced it had made an unsolicited offer to acquire Monsanto, a provider of agricultural and other chemicals. One of Monsanto’s flagship products was the weed killer Roundup, which generated nearly $5 billion annually in revenue for Monsanto. In March 2015, the International Agency for Research on Cancer deemed the active ingredient in Roundup, glyphosate, “probably carcinogenic to humans” and by early 2016, Monsanto faced numerous lawsuits from individuals who alleged that Roundup had caused their cancer.
In the nearly two years between the announcement and Bayer’s ultimate completion of its all-cash acquisition of Monsanto on June 7, 2018, for $63 billion, Bayer and its executives repeatedly made claims to investors regarding the expected benefits of Bayer’s acquisition of Monsanto and about their due diligence and analysis of potential exposure to risks stemming from Roundup cancer litigation (for which Bayer assumed liability when it acquired Monsanto). These and similar Class Period statements by Defendants were false and misleading because at that time Defendants knew or recklessly disregarded that Roundup created significant exposure to liability. Defendants’ false and misleading statements and omissions caused Bayer ADRs to trade at artificially inflated prices throughout the Class Period.
The truth began to emerge on August 10, 2018, when the jury in the first Roundup cancer case to go to trial found in favor of the plaintiff, including finding that Roundup was a “substantial factor” in causing the plaintiff’s non-Hodgkin’s lymphoma and that Monsanto had acted with “malice or oppression.” The plaintiff was awarded $39 million in compensatory damages and $250 million in punitive damages, which was later reduced to $39 million by the judge overseeing the case. In response to this news, the price of Bayer ADRs dropped by over 11%, falling from $26.59 per ADR to $23.59 per ADR.
Finally, on March 19, 2019, the final day of the Class Period, a jury in the first federal roundup cancer suit to go to trial (the “Hardeman case”) issued a verdict on causation in the first phase of a bifurcated trial. The jury found that the plaintiff’s “exposure to Roundup was a substantial factor in causing his non-Hodgkin’s lymphoma.” On this news, Bayer ADRs fell again, from $19.67 per ADR to $17.85 per ADR, a decline of approximately 9.3%.
As a result of Defendants’ false and misleading statements and omissions and the dramatic decline in the value of Bayer ADRs as the truth was revealed, Defendants caused the Pension Fund Investors and other Class members to suffer significant loss and damages.
The name of the lawsuit is: City of Grand Rapids General Retirement System and City of Grand Rapids Police & Fire Retirement System v. Bayer Aktiengelesellschaft, et al., Case No. 3:20-04737-RS, United States District Court for the Northern District of California.