BERLIN (Reuters) – Bayer (DE:) shares jumped on Thursday after the chemicals group beefed up plans to tackle multi-billion dollar lawsuits linked to glyphosate, a move welcomed by activist shareholder Elliott, which has revealed a sizeable stake in the company.
Shares in the German chemicals group, which have lost more than a fifth of their value since March, were up about 6% and were at 59.15 euros ($67.21) at 0704 GMT, their highest value in seven weeks.
Bayer said on Wednesday it had hired an external lawyer to advise its supervisory board and has set up a committee to help to resolve the glyphosate litigation issue.
The company’s shares have been under pressure following its $63 billion acquisition of Monsanto (NYSE:), which brought with it massive legal issues after more than 13,400 plaintiffs alleged the company’s glyphosate weedkiller caused cancer – a claim Bayer contests.
Baader Helvea analyst Markus Mayer said Bayer’s decisions were an indication that it might have changed its strategy in the glyphosate litigation cases and chances of legal settlements were rising. Mayer maintained his “buy” rating.
Elliott Associates on Wednesday welcomed Bayer’s steps, as it revealed for the first time its holding in Bayer shares worth 1.1 billion euros ($1.25 billion).
Elliott also said Bayer’s recent moves helped to resolve uncertainty linked to the glyphosate issue and lead to settlements with limited financial costs.
“Elliott believes that Bayer’s discounted share price today does not reflect the significant underlying value of its constituent businesses, or the potential value realisation opportunity that is in excess of 30 billion euros,” it said in a statement on Wednesday.
Major shareholders have criticised Bayer for its handling of the glyphosate issue which resulted in a vote of disapproval of its top management at April’s annual general meeting.
($1 = 0.8801 euros)
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