A major investment by Temasek Holdings of Singapore helped Bayer pull off a risky $63 billion purchase of Monsanto in 2018. But four years later, Temasek is blaming CEO Werner Baumann for a deal gone bad.
With a shareholder meeting set for April 29, Temasek has informed Bayer chairman Norbert Winkeljohann that it wants a change in leadership, according to a report from Bloomberg News. The investor is requesting a no-confidence vote in Baumann or a vote against ratifying the performance of management.
Another investor, Alatus Capital also has joined the call.
"The actions of Mr. Baumann have led to significant shareholder value destruction at Bayer," wrote (PDF) Alatus in a release. "Bayer’s share price has declined by 48%, significantly underperforming market indexes and peers."
Baumann, who took over as CEO of the conglomerate in 2016, has been under fire since the poorly-timed acquisition of Monsanto—just as the American firm was facing a growing mountain of litigation over weedkiller Roundup. The cost of the litigation has forced Bayer to sell certain assets across each of its sectors, including pharma.
In addition to displeasure over the Monsanto deal, some investors, including Alatus in its release, have urged Bayer to follow an industry trend by separating its pharma, crop science and consumer health sectors. But Baumann has resisted that pressure.
The news comes as Baumann, who has a contract through April 2024, had seemed in the clear. He survived a no-confidence vote in 2019 and at two other stockholder meetings where his leadership was questioned. The company’s performance has been on an uptick lately, including in the pharma sector.
After selloffs following the Monsanto deal, Bayer’s pharma revenue had dropped from €25.32 billion in 2018 to €23.71 billion in 2019, and then to €22.56 billion in 2020.
But last year saw a reversal with a 10% increase in sales, propelled largely by a strong performance from Eylea. The macular degeneration treatment generated €2.9 billion, representing a 19% bump from 2020.
The company also has a stable of products that are on the upswing including kidney disease blockbuster to-be Kerendia, X-ray agent Ultravist, blood pressure medicines Adalat and Adempas and birth control offerings such as Mirena and Yasmin.
Temasek has a 4% stake in Bayer. Another of its investors, Alatus Capital, also has reportedly agitated for the departure of Baumann. It’s unclear whether Temasek and Alatus have the backing from other investors to pull off the coup, Bloomberg said.
“An early termination of his contract would only cause chaos,” Janne Werning of Union Investment, which supports Baumann, told Bloomberg.
Marc Tungler of the German Association for the Protection of Securities (DSW) called the Temasek initiative “absurd theater, in terms of content and timing,” in comments to the German daily Handelsblatt.
“Now, in a phase in which Bayer is gaining a foothold again and is in an upward trend, such an attack alone can cause damage,” Tungler said.