For the quiet, unassuming man at the helm of Bayer, June 7 2018 looked like a day of triumph for Germany’s aspirin-to-weed killer conglomerate.
That was the day that Werner Baumann proudly announced the completion of a landmark $63bn deal to take over US rival Monsanto, the biggest ever acquisition by a German company.
For the Bayer chief executive, the logic of the deal was clear: at a time of furious consolidation in the sector, the tie-up would turn his group into the largest crops and seeds business on the planet — the company that farmers everywhere would turn to to help them feed the world.
It was, Mr Baumann declared at the time, a great day not just for Bayer’s customers, shareholders and consumers, but for “broader society” as well.
Fast forward to today, and that boast has taken on a hollow ring. The deal has come to haunt Bayer shareholders and managers alike, as the company battles an avalanche of legal cases claiming that Monsanto’s best-selling glyphosate-based weedkillers cause cancer.
Two US courts have already ruled against Bayer, ordering the group to pay tens of millions of dollars in damages. With more than 13,000 cases still pending, the legal risk has triggered a stampede of investors: Bayer’s share price is down almost 40 per cent year-on-year, wiping €34bn off its market value, and few analysts see any chance of a speedy reversal. The group insists that glyphosate is safe and that regulators and scientists are on its side. But it could take years to prevail in US courtrooms, if it ever does.
Mr Baumann, a Bayer lifer who joined the Leverkusen-based group straight from studying economics at university more than three decades ago, is under pressure as never before. At last week’s annual shareholder meeting, investors took the unprecedented step of backing a no-confidence motion in Mr Baumann and his colleagues. It was a stinging rebuke: the first time a majority of shareholders had ever voted against the board of a German blue-chip company.
The Bayer boss has also come under fire from German politicians. Anton Hofreiter, the leader of the Green faction in the German parliament, said recently: “If Bayer wants to save itself the company has to change . . . It would be for the best if the board made way for a new start.”
Under normal circumstances, the AGM vote might have been career-ending for the Bayer boss, who was paid €5.3m last year. Yet few expect him to be forced out immediately. For one thing, he enjoys the unconditional support of the supervisory board, which is headed by Werner Wenning, the former CEO of Bayer and a longtime supporter of Mr Baumann. Even critical investors believe the situation is too volatile to parachute in a new chief.
“A change in leadership would plunge this complex company into even greater chaos,” said Janne Werning, analyst at Union Investment, a Bayer shareholder. “The vote was a warning shot. But we think that management deserves a second chance.”
Mr Baumann’s public appearances have a slightly robotic quality, but executives praise him as a meticulous, analytical boss who rarely raises his voice. “He just seems to soak up the pressure,” says one. He is “the antithesis of the celebrity CEO”, says another.
Outside the company, observers say he still has it all to do. “He essentially bet the ranch on this transaction and the scorecard at this point suggests he lost,” said a German investment banker. “Bayer stood for aspirin, and health and happiness and now it’s saddled with this toxic brand. And he's paying the price.”
A 56-year-old father of four, Mr Baumann hails from Krefeld, a small town not far from Bayer’s Leverkusen headquarters. The son of a local baker, he still lives in the neighbourhood he grew up in, after long spells working in Barcelona and New York. Outside office hours, he is known as a DIY-enthusiast who enjoys fixing up his house, and as a collector of vintage cars.
Looking ahead, however, Mr Baumann is unlikely to find much time to get out his toolbox and racing goggles. Investors are restless, and the challenges at Bayer are plentiful and complex. Mr Baumann knows he needs to reverse the tide of lawsuits and adverse rulings quickly. If not, both he and his blockbuster deal are likely to go down as historic failures.
Additional reporting by Guy Chazan in Berlin
*This article has been amended since first publication to correct Mr Baumann’s pay
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