Bayer proposing to pay €7.1 bn to settle 18,000 lawsuits

By Jef Feeley and Tim Loh

Bayer is understood to be proposing to pay as much as $8bn (€7.1bn) to settle more than 18,000 US lawsuits alleging its Roundup herbicide causes cancer.

A settlement, which could take months to agree, would ease investor pressure over massive litigation exposure the German drug and chemical giant took on with its purchase of the weedkiller’s maker, Monsanto.

The fallout has erased more than $30bn in market value, prompted an unprecedented shareholder vote of no confidence in the company’s management, and fuelled speculation about a breakup.

While Bayer floated paying $6bn-$8bn to resolve current and future cases, plaintiffs’ lawyers want more than $10bn to drop their claims, according to sources.

How to compensate consumers who have yet to be diagnosed with illness is a sticking point, and there’s no guarantee the two sides will come to terms anytime soon, they added.

Bayer shares surged more than 11% in early trading yesterday — before paring some of those losses — the most in a decade on an intraday basis. They’ve still fallen about one-third in the 14 months since the Monsanto deal was completed. The bonds also rose.

“$8bn would be lower than most analysts are forecasting and many investors are fearing,” said Baader Helvea analyst Markus Mayer.

Bayer’s lawyers and attorneys for former Roundup users are in ongoing talks, based in New York, aimed at hammering out an accord to resolve all current cases and any future cancer claims filed over the world’s top-selling weedkiller.

The negotiations have advanced to the point that Bayer and plaintiffs’ lawyers asked two judges in St. Louis to push back cases set for trial starting soon.

Bayer chief executive Werner Baumann said at the end of July that he’d consider a “financially reasonable” settlement — after the company’s shares slumped amid a surge of new cases.

If a deal is agreed, it would allay a shareholder revolt in the wake of three trial losses in a row in California that resulted in average payouts of almost $50m per plaintiff after judges reduced jury verdicts totalling over $2.4bn. Thousands of new cases followed each defeat.

Major investors have been urging Bayer to drop its defend-at-all-cost approach to the suits and consider a settlement.

Bloomberg