By Simon Jessop and Ludwig Burger
LONDON/FRANKFURT (Reuters) - Bayer's largest shareholder, fund manager BlackRock, will not support the German company's management in a key vote at its annual general meeting (AGM) on Friday, two people familiar with the situation told Reuters.
About 30 billion euros ($34 billion) has been wiped off the pesticides and drugs firm's market value since August, when a U.S. jury found Bayer liable because Monsanto, which it bought for $63 billion last year, had not warned of alleged cancer risks linked to its weedkiller Roundup.
Bayer suffered a similar courtroom defeat last month and more than 11,000 plaintiffs are claiming damages.
BlackRock, which latest filings show owns 7.2 percent of Bayer's voting rights, plans to either abstain from or vote against ratifying the management board's actions during the year under review, the sources said.
The largely symbolic vote of confidence "will send a message to the board" that BlackRock is not happy with the way Bayer's management handled the Monsanto deal, one of the sources said.
Recent defeats in U.S. courts, which Bayer is appealing, have shed a new light on Bayer's assessment of the legal risks it took with the Monsanto deal, the source added.
A vote to ratify the board's actions features prominently at every German AGM. It has no bearing on management's liability, but is seen as a key gauge of shareholder sentiment.
Bayer's management, led by CEO Werner Baumann, could see an embarrassing plunge in approval ratings, down from 97 percent at last year's AGM https://www.investor.bayer.de/en/events/stockholders-meeting/asm-2018, which was held shortly before the Monsanto takeover was closed in June.
Asset management firm Deka, among Bayer's largest German investors, said over the weekend it would vote against ratifying management's action, having voiced sharp criticism earlier this month.
Also this month, shareholder advisory firms Institutional Shareholder Services (ISS) and Glass Lewis recommended investors not to give the executive board their seal of approval.
Singapore state investor Temasek and Norway's oil fund, Bayer's next two biggest shareholders after BlackRock, both declined to comment on their voting intentions.
Major Frankfurt-based asset managers DWS and Union Investment also would not disclose their plans.
Approval ratings of more than 95 percent have long been the norm at German AGMs but international investors have become more critical over recent years.
In a recent low for a company leadership team, former Deutsche Bank co-CEOs Anshu Jain and Juergen Fitschen scored approval ratings of 61 percent during the bank's 2015 AGM. Both announced their resignation within weeks.
Company filings showed this month that Bayer's supervisory board sought law firm Linklaters' expert opinion for reassurance that management had complied with its duties when acquiring Monsanto.
Non-executive Chairman Werner Wenning has come out in strong support of the top executive team and its decision to pursue the Monsanto deal. Sources have said the Wenning himself was a driving force behind the transaction.
The U.S. Environmental Protection Agency, the European Chemicals Agency and other regulators across the globe have found that glyphosate, the active ingredient in Roundup, is not likely carcinogenic to humans. However, the World Health Organization's cancer arm in 2015 reached a different conclusion, classifying glyphosate as "probably carcinogenic to humans."
(Additional reporting by Patricia Weiss, Anshuman Daga and Terje Solsvik; Editing by Alexander Smith and Mark Potter)