Bayer reportedly near settlement
Sources say drug giant is proposing $8 billion to resolve claims of cancer related to Roundup weedkiller.
Bayer is proposing to pay as much as $8 billion to settle more than 18,000 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 purchase of the weedkiller’s maker, Monsanto Co. The fallout has erased more than $30 billion in market value, 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 were 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 spokesman Tino Andresen declined to comment on any settlement talks.
Reports that a $6-billion to $8-billion settlement proposal has been discussed are “pure fiction,” said Kenneth Feinberg, a mediator called in by U.S. District Judge Vince Chhabria in San Francisco, who is overseeing cases consolidated in federal court.
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 Chief Executive Werner Baumann said at the end of July — after the company’s shares slumped amid a surge of new cases — that he’d consider a “financially reasonable” settlement.
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 U.S.-traded shares climbed 4.7% on Friday. They’ve fallen more than 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, said via email.
Bayer’s decision to seek postponement of the St. Louis trials is a clear signal settlement 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.”
Some litigation analysts have predicted Bayer will ultimately settle the cases for as little as $2.5 billion and as much as $20 billion. Experts have said that awards of tens of millions of dollars per plaintiff were a strong and bad sign for Bayer’s prospects in future trials, weakening its hand in settlement negotiations.
Bayer insists that Roundup is safe. On Thursday the U.S. Environmental Protection Agency issued guidelines for products containing the herbicide’s active ingredient, glyphosate, saying it will no longer approve labels claiming that it’s known to cause cancer. California listed the substance as a carcinogen under its Proposition 65 toxic warnings law two years ago.
Court officials said this week that Roundup trials set for August and September will probably be postponed. They did not say whether the postponements were tied to settlement talks.
Feeley, Rosenblatt and Loh write for Bloomberg.