Bayer AG will slash 1.5 billion euros of annual costs as pandemic’s impact on farm commodities goes into next year, according to Bloomberg. Move undermines rationale of $63 billion purchase of Monsanto Co. The agriculture and pharma giant is facing declines in crop prices and weakening biofuel demand due to pandemic, trade tensions, competition, and African swine fever.

  • Crop business will experience “deeper than expected” impacts that won’t improve in the near-term. 
  • Company expects to take billions of euros in non-cash impairment charges on assets in agricultural business. 
  • Bayer may eliminate jobs and sell businesses.
  • Bayer is reeling from a legal battle over Roundup herbicide.
  • Growth prospects of Monsanto had declined in the last 2.5 years, and “magnitude of this decline is greater than expected,”-Sebastian Bray, Berenberg Bank analyst.
  • Bayer’s 2021 guidance likely to dent sentiment, weakness driven by crop science unit hit by COVID-19 and currency-Bloomberg Intelligence
  • Bayer management lowering expectations in crop division through 2021, and perhaps 2022-Michael Shah, BI pharma analyst
  • Company’s pharmaceutical arm facing patent expirations in the next few years for two blockbuster medicines and pipeline of potential products regarded as weak-Shah

Bayer stock fell 13% in German trading, eliminating 6.6 billion euros. BAYN: Xetra is down 10.24%,