As of: January 29, 2024, 2:30 p.m
By: Amy Walker
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Bayer is once again facing severe punishment in the USA for its weed killer Roundup, which contains glyphosate.
The company's shares collapse again.
Philadelphia - A record fine for Bayer in the glyphosate trials in the USA is scaring the agricultural and pharmaceutical company's investors.
The shares fell by more than five percent to 30.48 euros in early trading on Monday (January 29), their lowest level in almost two months.
The papers were by far the biggest loser in the leading index Dax.
Bayer suffered another defeat in the glyphosate trials on Friday (January 26).
A jury in Philadelphia ordered the company to pay $2.25 billion to a man who blamed his cancer on Bayer's glyphosate-containing weedkiller Roundup.
This is the highest penalty that has been imposed on the company to date.
However, the amount is likely to be significantly reduced in the appeal process.
Glyphosate trials are starting again in the USA
After a long series of successes in the wave of lawsuits - which the company brought in with the takeover of the glyphosate developer Monsanto - Bayer lost five lawsuits in a row at the end of last year and won one lawsuit in December.
In total, the company won ten out of 16 cases.
Bayer had to accept its most expensive verdict to date in 2019 in the case of the Pilliod couple, to whom a jury awarded two billion dollars - but the penalty was reduced to 86.7 million by a judge.
According to fund manager Markus Manns from Union Investment, Bayer simply cannot get the glyphosate issue under control: “It looks as if the whole thing is starting all over again.
“The number of newspaper advertisements that US lawyers use to find potential glyphosate victims has increased massively and will be further boosted by the won case,” he told the
Reuters
news agency .
The options are limited: Bayer can either agree to a new settlement or selectively negotiate cases with good prospects of success for the group.
“Unfortunately, a new settlement would not put an end to the glyphosate case, as new plaintiffs would be knocking on Bayer's door in one to two years.
And Bayer lacks the money for recurring settlements worth billions every three to five years.”
Bayer has to cut staff and save money
The jury's most recent verdict in Philadelphia calls for $250 million in compensatory damages and $2 billion in punitive damages - which is also likely to be reduced on appeal because it exceeds the U.S. Supreme Court's guidelines.
Bayer also emphasized that damages in cases that had previously been lost had been reduced by more than 90 percent overall.
The weed killer Roundup is sold in the USA by Bayer and its subsidiary Monsanto © Haven Daley/dpa
However, the verdict is likely to cause CEO Bill Anderson an additional headache.
He has announced significant staff cuts at Bayer and wants to eliminate several management levels and simplify coordination processes.
The group structure is also being put to the test, as investors have demanded, but a split of Bayer is not expected for the time being, as Reuters learned from insiders.
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Bayer settled much of the then-pending Roundup lawsuit in 2020 for up to $9.6 billion, but did not receive court approval for an agreement to prevent future lawsuits.
Most recently, agreements were still pending for 52,000 of the total of around 165,000 registered claims.
At the end of 2022, provisions for settlements of existing and future glyphosate lawsuits still amounted to $6.4 billion.
To ward off further future lawsuits, Bayer has stopped selling products containing glyphosate to US private customers in 2023 - they made up the vast majority of plaintiffs.
Chief Financial Officer Wolfgang Nickl said in November that the company had no plans to change its litigation strategy despite recent defeats.
“We have no desire to write huge checks to settle glyphosate lawsuits when we have little free cash flow.” Bayer has always rejected the allegations against glyphosate.
Authorities worldwide have classified the drug as non-carcinogenic.
The World Health Organization (WHO) cancer research agency IARC rated the active ingredient as “probably carcinogenic” in 2015.
“We will continue to litigate lawsuits because it has been proven that we win cases when plaintiffs' attorneys cannot misrepresent the scientific and regulatory assessments,” Bayer said.
(wal/Reuters)