Legal war hits Bayer shares

Shares of Bayer plunged by the most in almost seven years on concern about the potential costs of a protracted legal battle over Roundup weed killer, the cornerstone product of newly acquired Monsanto.

Monsanto was socked with $289 million (R4 billion) in damages in the first trial over claims that the herbicide causes cancer, when former school groundskeeper Lee Johnson prevailed on Friday in San Francisco state court.

The company, whose market value fell by more than €10 billion ($11.4 billion) yesterday, says Roundup is safe.

The trial was an important test of the evidence against Monsanto and will serve as a template for litigating thousands of other claims over the herbicide. Bayer closed a deal to buy Monsanto for $66 billion in June. If the litigation generates large verdicts, it could have a material impact on Bayer’s bottom line.

Shares of Bayer slumped 12% in Frankfurt yesterday. That extended its rout this year to 19%. Bayer’s €1.5 billion of bonds due in December 2029 plunged three cents on the euro to the lowest since the company issued them in June to pay for the Monsanto acquisition.

Glyphosate, the active ingredient in Roundup, was first approved for use in Monsanto’s weed killer in 1974. It became the world’s most widely used herbicide, but whether it causes cancer has been hotly debated by environmentalists, regulators, researchers and lawyers — even as Monsanto has insisted for decades that it’s perfectly safe.

“More than 800 scientific studies and reviews support the fact that glyphosate does not cause cancer and did not cause Mr Johnson’s cancer,” Monsanto vice-president Scott Partridge said.

The company’s reliance on Roundup extends far beyond selling it as a weed killer. Monsanto genetically engineered the DNA of maize, soybeans and other crops to make them resistant to Roundup; it now makes more revenue from seeds and traits than from herbicide.

Jurors awarded Johnson, the groundskeeper, $39 million for his losses and $250 million to punish Monsanto after finding it liable for a design defect and failing to warn of Roundup’s risks. The company said it would appeal.

Working for a school district in Benicia, California, Johnson mixed and sprayed hundreds of litres of Roundup. He was diagnosed with cancer in 2014 and in July 2017, after chemotherapy and other treatments, his oncologist gave him six months to live.

Johnson’s lawyers argued that his exposure to Roundup caused his non-Hodgkin’s lymphoma. Monsanto argued that the type of cancer he contracted takes many years to form. The short period between Johnson’s first exposure in 2012 and his diagnosis in 2014 made a connection between his contact and the disease impossible, it said. – Bloomberg