German Conglomerate Bayer Faces Investor Scrutiny Amid Unexpected Legal, Trial Setbacks

BY Benzinga | CORPORATE | 11/24/23 12:48 PM EST

Bayer AG (BAYZF) (OTC:BAYRY) (OTC:BAYZF) reportedly held an investor call to address concerns after intense scrutiny from investors following a series of unforeseen setbacks, prompting questions about transparency surrounding its recent $5.75 billion bond issuance. 

The company encountered a cascade of issues, including a major setback in a late-stage anti-clotting drug trial that led to its abrupt termination. 

This development, coupled with adverse legal rulings, where Bayer was ordered to pay substantial sums over its Roundup weed-killer, triggered uncertainties among bond investors.

Citing Andrew Brady, Head of Basic Industries Research at CreditSights, Reuters, in its report, highlighted investors' discontent, expressing concerns over whether Bayer's management hurried the bond issuance preceding the release of distressing news. 

Bayer's bankers engaged in discussions with top stakeholders to assuage anxious investors. During these talks, investors sought clarification on the potential impact of these setbacks on the company's financial outlook. 

Bayer emphasized its financial reserves to address Roundup litigation, asserting the unpredictability of jury verdicts.

Despite these challenges, Bayer priced bonds with maturities spanning three to 30 years, attracting orders exceeding $22 billion, marking it as one of the ten largest investment-grade bond deals by an industrial company this year.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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