Bayer wins Supreme Court litigation ruling

If you have already taken our survey about a Saturday FT newews briefing, thank you, but you can ignore this just Toe me out for like the next ten seconds For everyone else takeake the survey. The link is in the show notes, and by taking it, you could win a fancy new pair of headphones All right Oo the show Good morning from the Financial Times Today is Friday, june twenty sixth And this is your FTEs briefing The race to succeed Jamimie Diamond just got a little tighter. and concerns over Space X's bond sales are bubbling up Plus, the US's top court is shielding Ber from litigation related to the weed killer roundup. They were in a big crisis and now this offers them a way out. So at the end, it's great news for the company and for their CEO, Bill Anderson Filipino and here's the news you need to start your day JP Morgan Chase elevated two possible candidates yesterday to eventually replace Jamie Diamond as CEO Petno and Troy Rorbaugh will serve as co presidents of America's biggest bank What does that mean for the future of JP Morgan though Joshua Franklin is the FFT's US banking editor He joins me now to talk about this. Hi Josh. So first of all introduce us to Petno and Rbagh Who are they and how will they split this role So this is One of the most closely watched, if not the most closely watched succession battles on Wall Street. It's also one of the most slowly moving succession battles on Wall Street. It's been going on for a long time So the simplest way to think about these two guys is Doug Petneo is an investment banker and Troy Robaugh is a trader. Up until now, they've been co heads of the commercial Investment Bank division at JP Morgan, which is about forty percent of the bank's profits. and neatly it is basically made up of investment banking and trading Now what's going to happen is Doug Petno is going to be the sole head of that business And Troy Robagh is going to become the head of the Chase Consumer business at JP Morgan, which is also about forty percent of the bank's profits. In addition to the elevation for Petno and Roba, you also had the announced departure of Marianne Lake who was also a top candidate for the job Her departure was quite a big surprise Now, you said that this is a slow moving succession. Race at JP Morgan, you and I have talked about this a couple of times now. How significant is this appointment that we're talking about with Peto and Roorbaugh We won't know How significant ultimately until the day that Jamie Diamond eventually decides to leave? He's now in his third decade running the bank But this is potentially one of the most significant succession updates in years. Over the decades, there have been numerous potential CEO candidates. But now Jamie Diamond has been there for a long time. He just turned seventy this year Proably a number of years he has left, but probably it is true that every day he has one less day running JP Morgan, and we potentially are getting closer now to finding that successor. And so these are the two guys that maybe are just around at the right time to really be in the kind of final race for the job So you, it sounds like we shouldn't necessarily be starting the countdown clock on Diamond's retirement No, he has made pretty clear that he has no immediate plans to step down. I think we're still talking more years than anything else with Jamie Diamond staying on as as CEO. And then the other thing I think for people to remember is He's talked very openly about wanting to stay on as executive chair of the board of directors at JP Morgan even after he hands over the CEO job. So it's very likely that Jamie Diamond is going to stick around for a long time Joshua Franklin is the FT's US banking editor. Thanks much, Josha Thanks, Mark Bacex decided to launch a bond sale shortly after its record breaking IPO And it's a sign that markets are entering, quote, bubble territory According to the investment chief at insurance Group Aiance. He made this warning at the FT's Global inssurance summit, and FT senior Mets correspondent Ian Smith was there He joins me now. I am I'm out So let's hear exactly what Ludfk Subron said When you start to see too much debt being taken to give back this money to shareholders for too long This looks public. So for me, that's where you see the frothy market. And basics is a good example because everybody has been looking at this IPO, whatnot. And then the guy says, Ohh, by the way, I want to get twenty billion. and the bond guys are like, but youre losing money. Ian, can you expand on what Subperron said and what he was referring to here. Yeah so the context here is that investors have grown nervous that companies are rushing to issue debt perty at a time where stock markets have reached record highs cororporate credit spreads, which show the borrowing costs that companies have to pay relative to the government, have fallen to their lowest levels this century. So there is some concern among investors that at these very high valuations, companies are rushing to the market to issue equity or debt, and that could be a signal that frothy markets have reached a top. And within that, SpaceX coming out with a bond sale more than twenty billion dollars after an eighty billion dollars equity issuance has raised eyebrows in the market that it came so soon with a bond deal that concern that people have that there is this issuance signal about where the market might be headed Now Ian Subron also said at this summit that bond investors would be less forgiving than equity investors of Multibillion dollar losses at SpaceX, What did he mean when he made this distinction I don't think the point here is that bond investors are supposed to be smarter than equity investors, but it is true that they might be more focused on downside risks or risks to the coupons that they receive on the bonds. So he was arguing that they would be more scrutinizing of SpaceX's kind of journey to profitability and of its high capital expenditure has had to pay a higher borrowing cost than companies with a similar credit rating, partly because some investors are worried about its high capital expenditures. So you can see how some bond investors might be more focused on the company's ongoing ability to service its debt and less focused on the long term growth story of getting to Mars that might attract some equity investors. There have been a lot of warnings about market bubbles. Subron is far from the first. We saw pretty big sell off earlier this week. What do you make of all this? I do you think there is a question around equity supply? We've seen in prior periods where stock markets have got quite frothy that companies have come to issue, and we saw it in twenty twenty two and that has been a signal that companies are taking advantage of valuations that perhaps can't be maintained There is also this question of how the US equity market could respond to a rise in US interest rates Now that would put more pressure on borrowers obviously. And if you have more tech groups in the camp of being borrowers, that could put pressure on some of the refinancing. But it could also pull down on stock market valuations because the present value of future profits is flattered by lower interest rates. So there is that interesting sensitivity in the market right now. You've got a lot of supply coming through and you've got a little bit of unease about what higher interest rates in future could mean. And I think that's the prism with which to look at these SpaceX deals tellell us a little bit about where the US stock market could be going I Smith is the FT's senior markarkets correspondent. Thanks so much, Ian. Thanks, Mark Ber, the German Parmmer group had a terrific day on the stock market yesterday. its shares at one point were up twenty percent thanks to a U. S. Supreme Court decision, which ruled in favor of Monsanto bought Monsanto back in twenty eighteen And it faces tens of thousands of lawsuits alleging it misled customers on the safety of one of its weed killers. But yesterday, the Supreme Court hed Monsanto and Bayer a clean slate Florian Mueller covers Bear in Fankfurt, Hi Florian Hi. So I alluded to it a little bit. What is this case all about Basically, this case is about the allegation that the whed killer roundup would have caused cancer. And so they've been battling over this for years and a lot of different state courts Bically ruled that Buyer was liable and basically they had failed to warn the consumers of the risk that the product might cause cancer Byer has always argued that basically a lot of state regulators including the EPA and the US. had said that their product was safe and that actually they were not allowed to put a warning label on their bottles. And so in the end, this became a matter for the US. Supreme Court, which now needed to decide Right. So a lower court awarded money to a plaintiff that alleged that he had gotten cancer from roundup, but the Supreme Court overturned that basically shielding bear from any similar lawsuits Floren, why is this so significant for the company? This is very significant for the company because Byer has already paid moreore than ten billion US dollars in litigation ever since they bought Monsanto and they might have ended up paying a huge amount more If this verdict now wouldn't have come in and given them a stronger legal argument in the tens of thousands of cases which are still ongoing, claayants might find it harder now to sue buyer. And at the same time, Byer right now is pursuing another class settlement. So that's why investors are so relieved because basically the litigation costs risk Now is finally known and this is not such a grave danger anymore. Yeah, it feels like a weight lifted off the company What does this mean for Bear going forward So the verdict of the US Supreme Court is the first step. Now the next step will be the finalization of the settlement which is expected for the upcoming weeks And once all of that is settled, then basically buuyer can go back to focus on its turnaround because over the last couple of years Because of all of this litigation going on, the company was pretty much barred from doing anything else. They were in a big crisis. and now this offers them a way out. They can probably continue to produce glyphosate, which is the active ingredient in the roundup. They can focus also more on the phmmer pipeline. It might actually free up some money to pay back their huge amount of debt. So at the end, it's great news for the company and for their CEO, Bill Anderson Floria Mueller is the FFT's Fankfur correspondent. Thanks so much Floria. Thank you You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT news briefing. Check back next week for the latest businessiness news. The FT news briefing was produced this week by Sfia Ahmed, Sonya Hudson, Kata Kumkova, Fiona Simon, and Victoria Craig. I'm your editor Mark Filipino. Our show is mixed by Alex Higgins and Kelly Garyry. We get help this week from Peter Barbbera, Michel Lello, David DeSilva, and Gavin Coleman. Our intern is Cole Van Milttenberg, our executive producer is Tophher Forehez, Flo Phillips is the FT's global head of audio, and our theme song is by Metaphor Music.