Bayer proposes $8B to settle 18,400 Roundup cancer cases
Bayer is proposing to pay as much as $8 billion to settle about 18,400 U.S. lawsuits alleging its Roundup herbicide causes cancer, according to people familiar with the negotiations.
An agreement, which could take months to work out, would ease investor pressure over massive litigation exposure the German drug and chemical giant took on with its $63 billion purchase of the weedkiller’s maker, Monsanto Co. The fallout has weighed on the stock price, prompted an unprecedented shareholder vote of no confidence in the company’s management and fueled speculation about a breakup.
While Bayer floated paying $6 billion to $8 billion to resolve current and future cases, plaintiffs’ lawyers want more than $10 billion to drop their claims, the people said, asking not to be identified because the talks are private. 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% Friday in Frankfurt, 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.
“$8 billion would be lower than most analysts are forecasting and many investors fearing,” Markus Mayer, an analyst at Baader Helvea, wrote by email.
Bayer spokesman Tino Andresen declined to comment on settlement talks.
Bayer’s lawyers and attorneys for former Roundup users are in ongoing talks, based in New York City, aimed at hammering out an accord to resolve all current cases and any future cancer claims filed over the world’s top-selling weedkiller, people familiar with the discussions said.
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, the people said.
Bayer CEO 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 comes together, 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 $50 million per plaintiff after judges reduced jury verdicts that added up to more than $2.4 billion. Thousands of new cases followed each defeat.
Major investors — such as U.S.-based billionaire Paul Singer’s Elliott Management Corp. — have been urging Bayer to drop its defend- at- all- cost approach to the suits and consider a settlement. Elliott disclosed in June that it has a $1.3 billion stake in Bayer.
Bayer’s decision to seek postponement of the St. Louis trials is a signal talks are progressing, said Carl Tobias, a University of Richmond law professor who teaches about mass personal injury litigation. U.S. judges traditionally put cases on hold to give the parties a chance to resolve them, he said.
“If they can get out of this for under $10 billion after losing three in a row — with big awards assessed — it would be a great deal for Bayer,” Tobias said. “They lose a couple of more big ones in St. Louis and settlement demand could balloon to $20 billion.”