Bayer’s Two-Front Battle: A Supreme Court Pivot and a €7 Billion War Chest

Bayer enters a defining week with its stock under pressure, a Supreme Court hearing on the horizon, and shareholders having just handed management a powerful financial weapon. The German pharmaceutical and agricultural giant is navigating a delicate balancing act between mounting legal liabilities and a nascent pipeline recovery.

The company’s shares closed at €38.50 on Friday, shedding nearly 4% in a single session. That leaves the stock roughly 5% below its 50-day moving average and more than 20% off the February high of €49.17. The selloff reflects growing investor anxiety about both the near-term legal overhang and the potential dilution from a freshly approved capital increase.

A €7 Billion Shield Against Litigation Risk

At the annual general meeting on Friday, shareholders voted 59.42% in favor of a resolution authorizing Bayer to issue new shares worth up to €7 billion. CEO Bill Anderson stressed that no immediate capital increase is planned. Instead, the move is designed as a financial backstop — a signal that Bayer has the firepower to pursue broad settlements in the ongoing glyphosate litigation.

The vote was close, reflecting deep unease among some investors about the dilution risk. But the message from management is clear: Bayer is preparing for a potentially costly resolution of the thousands of pending Roundup lawsuits.

Dividend Slashed to the Bone

The company’s austerity drive remains in full force. For the 2025 fiscal year, Bayer will pay the legally mandated minimum dividend of just €0.11 per share — a yield of 0.29% at Friday’s closing price. The payout, which goes ex-dividend on Monday, is a stark reminder that the balance sheet is being prioritized over shareholder returns.

Special litigation expenses hit €6.2 billion in 2025, and the company has warned of negative free cash flow in 2026 as roughly €5 billion flows toward ongoing legal proceedings. The cost-cutting program, targeting €2 billion in annual savings by the end of next year, has already eliminated 12,000 to 13,500 positions.

Should investors sell immediately? Or is it worth buying Bayer?

The Supreme Court Wild Card

All eyes now turn to Washington. On Monday, the US Supreme Court hears oral arguments in the Durnell case, which could reshape the legal landscape for Bayer. At issue is whether federal law preempts state-level labeling requirements for glyphosate-based products. A ruling in Bayer’s favor would effectively neutralize thousands of pending claims.

A decision is expected by June 2026. In the meantime, a key deadline looms: June 4, when plaintiffs can opt out of the existing settlement or lodge objections. The outcome of the Supreme Court case will determine how much of Bayer’s multi-billion-euro litigation provisions are actually needed.

Pipeline Progress Offers a Counterweight

Despite the legal turmoil, Bayer’s pharmaceuticals division is showing signs of life. The company secured two approvals from Japan’s health ministry in March, including the MRI contrast agent Ambelvist — described by Bayer as the first global approval for the product. That marks a rare bright spot in a pipeline that has been overshadowed by patent expiries, particularly the loss of exclusivity on blockbuster blood thinner Xarelto, which will weigh on 2025 and 2026 results.

Bayer expects a return to growth from 2027 onward. For the current year, management targets adjusted earnings per share of between €4.30 and €4.80, a sharp recovery from the €3.68 loss per share recorded in 2025.

What Comes Next

The next major milestone arrives on May 12, when Bayer reports first-quarter results. That will provide the first hard data on whether the operational turnaround is gaining traction. Analysts at Barclays remain bullish, maintaining an overweight rating and a €48 price target.

For now, the stock’s 71% year-to-date gain — despite the recent pullback — suggests some investors are betting that the worst of the legal storm has passed. But with the Supreme Court hearing, a potential capital increase, and a dividend that barely registers, the next few weeks will test whether that optimism is justified.