Bayer shares plunge after cash-raising plans unveiled

FRANKFURT, Germany — Shares in German chemicals giant Bayer plunged over 10 per cent on Friday after the group said it could issue new shares to handle potentially expensive US lawsuits.

"We have heard from shareholders just how much ongoing legal disputes are impacting their investment in Bayer," the chair of the group's supervisory board, Norbert Winkeljohann, said in a letter to shareholders.

"Whilst we are working to contain legal disputes, we find ourselves in a situation where we may need capital quickly," he said, adding that Bayer would ask for shareholder approval to issue new stock equivalent to 35 per cent of the group's current share capital.

Bayer has been dogged by lawsuits linked to the Roundup weedkiller, a problem it inherited from the 2018 takeover of US firm Monsanto.

The group has faced a wave of litigation in the United States over claims that glyphosate, the active ingredient in Roundup, causes cancer.

Bayer denies the claim but has spent more than $10 billion dollars (9.2 billion euros) settling suits related to Monsanto.

Issuing new shares would allow Bayer to raise cash, but could be unpopular with existing shareholders since it would dilute the value of their holdings.

"Shareholders have also made very clear, that Bayer would have to be careful in the case of any capital raise because of the dilutionary effect," Winkeljohann noted in his letter.

At annual results on Wednesday, Bayer said it made a net loss of minus 2.6 billion euros.

CEO Bill Anderson said in a statement that he hoped Bayer could "significantly" contain risks related to US litigation by the end of 2026.

Bayer shares recovered slightly after the initial drop, trading down around six per cent at 23.30 euros at 1350 GMT.