$BAYN (+0,74%) Good evening everyone, I would like to share my thoughts on Bayer here, as there hasn't been a proper post about it recently.
Basically, of course, the Monsanto chains are still on Bayer, and quite firmly at that.
Current legal situation:
The US Supreme Court is now involving the Attorney General and is considering Bayer's appeal in a key case (Durnell) as the company tries to assert federal preemption .
In parallel, a settlement is being sought in Missouri. If that fails, Bayer is considering filing for Chapter 11 bankruptcy protection for the Monsanto subsidiary - to consolidate current and future lawsuits - according to the WSJ.
Consequences:
Supreme Court decision on appeal (esp. Durnell case): positive would be federal protection from state lawsuits.
Missouri settlement: if achieved, it could break waves - if not, Chapter 11 looms.
Bayer internal:
Bayer is working on a glyphosate substitute and wants to launch a new, less controversial herbicide formulation on the market as early as 2028.
CEO Bill Anderson does not plan to spin off the agricultural division - instead, a new organizational model is to be established that decentralizes decision-making processes and makes them flatter.
For Monsanto as an independent brand, there is currently no longer an operating unit The brand was integrated in 2018, but the legal intention is to use it specifically in the event of insolvency (Chapter 11 of the US subsidiary) in order to bundle liabilities there and remain in the parent company outside of insolvency.
I would therefore assume, based on the analysts' stance, that Bayer will most likely be able to close the deal with Monsanto in the course of 2026. Either through a final, national settlement or through insolvency of the subsidiary.
Consequently, it is forecast that Bayer could and would pay a dividend of between EUR 1 and EUR 2 again in 2027.
UBS assumes that Bayer will pay a dividend of EUR 2 to 3 again in 2030 and that the share price will have recovered strongly by then.
This would mean a dividend yield of around 10% on today's capital employed.
One must not forget that the machinery behind bayer is still running very well, they are still making billions in sales. Of course, this is overshadowed by the debt. Nevertheless, the company is not functioning well and, in my opinion, also has a good pipeline. Especially with the first approvals in the USA this week, this is a good opportunity, as approvals in the EU and China will then become easier.
So if Monsanto were to be shelved, that would be a great opportunity.
If not, and Bayer were to spin off and file for bankruptcy for the spin-off, it would also be a great opportunity, as Bayer is still doing very well.
But why is the stock not yet priced in like this?
Fear of the management. It is conceivable that a national settlement will be reached in the USA, with far too high costs, which Bayer will nevertheless accept for image reasons and take on much more debt, to a disproportionate extent, instead of letting a subsidiary go bankrupt. I see this as the biggest fear at the moment.
- Nevertheless, I think Bayer has excellent opportunities over the next three years, which is why I filled my position today.
