In April 2018, Temasek Holdings decided to invest in Bayer. It bought 3.6 per cent stake for 3 billion euros at 96.77 euros per share.
The money is used as part of Bayer’s plan to takeover Monsanto, a US company which sells weed killer products. Together with its existing holding in Bayer, Temasek would then own about 4 per cent in Bayer after the transaction.
By June 2018, with Temasek’s help, Bayer successfully acquired Monsanto to become the biggest seed and agricultural chemical maker in the world. However, since the acquisition, lawsuits have been mounting in the US whether Monsanto’s weed killing product, “RoundUp”, causes cancer.
Dewayne Johnson, was the first person who successfully obtained a verdict against Monsanto. Johnson sprayed some hundreds of gallons of RoundUp over the course of his career as a school groundskeeper in Benicia, California.
On one occasion, one of the sprayers he was using broke, and he was drenched in RoundUp. In 2014 at age 42, Johnson was diagnosed with non-Hodgkin lymphoma, which he alleged at trial was caused by the pesticide exposure.
In 2017, he was given a terminal diagnosis. Despite the ongoing lawsuit, Temasek still went ahead to invest in Bayer, helping the company to successfully acquire Monsanto.
Two months after Temasek helped Bayer to acquire Monsanto, in a landmark verdict in August 2018, Monsanto was ordered by a San Francisco court to pay US$289 million in punitive damages and compensatory damages. Bayer’s subsidiary, Monsanto, appealed several times, but lost.
The award to Johnson was later cut to US$78 million, then finally reduced to US$21 million. Because of the success of Johnson’s lawsuit, more than a hundred thousand people began to come forward to claim similar damages against Monsanto.
So far, since the acquisition of Monsanto 5 years ago, Bayer agreed to settle much of that litigation for US$10.9 billion in 2020. As of February this year, about 109,000 of the 154,000 claims had been settled or deemed ineligible. Nevertheless, some 45,000 cases are still pending.
Bayer’s share price dives
After Johnson won his lawsuit against Monsanto in August 2018, Bayer’s share price immediately dropped sharply.
As of last Friday’s closing (16 Jun), Bayer’s share price was 52.33 euros. A quick check online shows Temasek is still largely holding on to Bayer’s share. It is the largest shareholder of Bayer with 3.5% of holdings.
Since Temasek bought 3 billion euros worth of shares at 96.77 euros in 2018, five years ago, that means it has lost 44.44 euros per share or 46% of the original 3 billion euros investment. This amounts to about 1.4 billion euros or S$2 billion of losses.
If Senior Minister Tharman Shanmugaratnam eventually becomes the new President of Singapore, it’s unknown whether he will question the Sovereign Wealth Funds (SWFs) over such losses.
Mr Tharman’s candidacy announcement has sparked scrutiny from critics, including Kenneth Jeyaretnam, Secretary General of the Reform Party.
Mr Jeyaretnam voiced concerns over the potential conflict of interest, given Mr Tharman’s extensive roles in the Government, particularly as Finance Minister, Chairman of the Monetary Authority of Singapore, and Deputy Chairman of Singapore’s SWF, GIC.
“Ownself Check Ownself” wrote Mr Jeyaretnam in a recent blog post, criticizing the prospect of Tharman auditing the management of the state’s reserves, a responsibility he previously held as a key figure in the Government.