Bayer shares fall up to 14% after Monsanto’s Roundup lawsuit

California jury has ordered a Bayer subsidiary to pay €254m for not warning of cancer risks posed by its main weed killer

 The herbicide Roundup, which contains glyphosate. Roundup is manufactured by the Monsanto company, a unit of German pharmaceutical company Bayer, in St Louis in the US. Photograph: Steffen Schmidt/EPA

The herbicide Roundup, which contains glyphosate. Roundup is manufactured by the Monsanto company, a unit of German pharmaceutical company Bayer, in St Louis in the US. Photograph: Steffen Schmidt/EPA

 

Bayer shares plunged as much as 14 per cent on Monday, losing about $14 billion in value, after newly acquired Monsanto was ordered to pay $289 million in damages in the first of possibly thousands of US lawsuits over alleged links between a weedkiller and cancer.

After the verdict in favour of a California school groundskeeper with terminal cancer, Monsanto faces more than 5,000 similar lawsuits across the United States over claims it did not warn of the cancer risks of glyphosate-based weedkillers, including its Roundup brand.

Monsanto, bought by Bayer this year for $63 billion, said it would appeal against the jury’s verdict in California, which is the latest episode in a long-running debate over claims that exposure to Roundup can cause cancer.

The case by plaintiff Dewayne Johnson, filed in 2016, was fast-tracked for trial due to the severity of his non-Hodgkin’s lymphoma, a cancer of the lymph system that he alleges was caused by Roundup and Ranger Pro, another Monsanto glyphosate herbicide.

“The jury’s verdict is at odds with the weight of scientific evidence, decades of real world experience and the conclusions of regulators around the world that all confirm glyphosate is safe and does not cause non-Hodgkin’s lymphoma,” Bayer said in a statement.

Approval

Having closed the Monsanto takeover, Bayer is only awaiting the approval of some final antitrust-related asset sales before folding it into its own organisation. It did not negotiate any payments from Monsanto shareholders for Roundup-related litigation.

Bayer shares were down 11.2 per cent at €82.93 at lunchtime, making it the worst performing stock on the Stoxx Europe 600 index , and on track to close at their lowest in almost five years.

Barclays analysts said Bayer was in for a “litigious headache”.

“Whilst an appeal is certain and may indeed likely result in the penalty being moderated at a minimum if not reversed altogether, a large number of similar pending cases will now likely multiply.”

Berenberg analyst Alistair Campbell said resolving the issue could cost Bayer $5 billion, citing a rough estimate based on a past product liability settlements such as Merck’s $4.9 billion settlement over painkiller Vioxx or Bayer’s own $4.2 billion total settlement over the Baycol cholesterol drug.

The controversy could also affect future revenues. – Reuters