Bayer flags $750m higher Roundup settlement bill

Cost of settlement initially put at $11bn but class plan revised

Bayer said the outlay to settle the Roundup litigation will be higher than anticipated in June. Photograph: iStock

Bayer said the outlay to settle the Roundup litigation will be higher than anticipated in June. Photograph: iStock

 

Bayer is facing a double hit from a higher legal bill for claims relating to weedkiller Roundup as well as €9.25 billion in impairments on agriculture businesses, much of it related to its Monsanto deal.

The company said the write-downs, driven by weaker demand from farmers due to low biofuel prices, plus an increase of about $750 million (€641 million)in the costs of settlement terms with US plaintiffs over Roundup, resulted in a loss before interest and tax of €9.4 billion in the third quarter.

The German drugs and chemicals maker is far enough along in talks with US plaintiff attorneys to realise that the outlay will be higher than anticipated in June, it said in a statement on Tuesday.

Takeover

The Roundup litigation continues to vex chief executive Werner Baumann, who orchestrated the $63 billion takeover of Monsanto that gave Bayer the embattled herbicide.

The company failed to settle outstanding Roundup lawsuits by Monday, a deadline set by a judge who has said he’ll resume federal trials over claims the weedkiller caused consumers’ cancer.

The company said Tuesday it has Roundup agreements that are completed, in the process of being finalised or that have been reached “in principle” for 88,500 claims – but that it can’t say with certainty that the total number of existing Roundup suits is 125,000 until the entire settlement process is complete.

The company is in talks with a large number of the remaining plaintiffs, Mr Baumann told reporters on a call.

Bayer expects to reach an agreement with plaintiff attorneys about how to handle future Roundup cases and to seek preliminary approval for that pact within weeks, he added.

The company lost three US trials related to the product and watched as the ranks of plaintiffs filing charges multiplied. Bayer insists the product is safe and is appealing.

Cases

The company in June said it would pay as much as $10.9 billion to resolve Roundup litigation. That figure included up to $9.6 billion to resolve existing lawsuits and another $1.25 billion for future cases.

Bayer plans further acquisitions and licensing deals in pharma and consumer health after an agreement last month to buy US biotech company Asklepios BioPharmaceutical for as much as $4 billion, according to its CEO. AskBio is a developer of gene therapies for ailments such as Parkinson’s disease and congestive heart failure.

Mr Baumann said that Bayer is also considering selling some larger assets that aren’t central to the company’s strategy and is already divesting small parts of the consumer health business.

The pandemic initially weighed on Bayer’s pharma division as people put off non-urgent surgeries and other health-care needs.

But in the third quarter it became clear that the biggest impact from the crisis might be to its crop-science division due to flagging demand for some farm commodities and biofuel.

The company posted adjusted third-quarter earnings of €1.8 billion before interest, taxes, depreciation and amortisation. That missed the €2.06 billion average of analyst estimates. – Bloomberg, Reuters