By Ruth Bender
Bayer AG said Wednesday it would pay up to $10.9 billion to settle tens of thousands of lawsuits with U.S. plaintiffs alleging the company's Roundup herbicide causes cancer, a milestone in the German company's legal battle that has been weighing down its share price for nearly two years.
Investors have long been waiting for a settlement to bring clarity over how much the litigation will cost Bayer, following its 2018 purchase of U.S. agricultural giant Monsanto Co.
The deal brought the company thousands of Roundup-related lawsuits. Three jury-trial losses tanked shares and sparked a revolt among shareholders angry at Bayer's management for plunging the company into one of the worst crises in its history with the $63 billion Monsanto acquisition.
Wednesday's deal, which follows months of heated talks between Bayer and plaintiffs' attorneys, doesn't change anything in Bayer's view that glyphosate, the active ingredient in Roundup, is safe and doesn't cause cancer.
Bayer didn't admit to any wrongdoing as part of the settlement and continued to defend its decision to purchase Monsanto. The company will continue to sell Roundup.
The agreement, however, leaves open the potential of more lawsuits being filed against the company in the future, an issue investors have been particularly concerned about.
As part of the deal, Bayer said it has set aside between $8.8 billion and $9.6 billion to settle claims brought by lawyers representing some 95,000 plaintiffs, as well as some 30,000 more claims that haven't yet agreed to the settlement. The company said it would set aside another $1.25 billion to work toward a resolution of future claims, including funding a panel to evaluate whether the product causes cancer. The findings from that panel are geared to help shape the outcome of litigation going forward.
Separately, Bayer largely resolved two other legacy Monsanto cases Wednesday, involving a toxic banned chemical and a different weedkiller.
The series of settlements highlight how Bayer, the 157 year-old inventor of aspirin, is trying to move past the lingering problems triggered by the Monsanto deal.
"The litigation and the burden and some of the negative reputational impacts that come with this, we can leave those now behind us," Werner Baumann, Bayer's chief executive, said in an interview.
That Bayer's Roundup products will continue to be sold, without a cancer warning label, leaves the company exposed to future lawsuits. It creates a unique legal conundrum for the company over how best to guard itself against potential future litigation.
To attempt to resolve the key question of whether glyphosate is a carcinogen, Bayer is seeking court permission to create a class of future plaintiffs and fund a five-member scientific panel that will spend several years evaluating the link between Roundup and cancer.
The panel will report its findings to U.S. District Judge Vince Chhabria in San Francisco. A conclusion that the product doesn't cause cancer will essentially shut down any future cases. If the panel does find a link between Roundup and cancer, Bayer would have to fight plaintiff-by-plaintiff to prove the individuals' cancer wasn't caused by the product, a point that unsettled some investors.
Mr. Baumann said on a conference call Wednesday that while "it's not 100% certain," Bayer is confident the panel will back its view that glyphosate isn't carcinogenic. The company has previously said that hundreds of regulatory agencies, including the Environmental Protection Agency, and scientists have deemed the product safe.
"We need to take the decision about carcinogenicity of the product out of the hands of juries," said Mr. Baumann. The scientists on the panel, he said, would be selected both by Bayer and plaintiffs' lawyers, to come to a "fair and solid" conclusion.
The creation of such a court-overseen science panel is rare, said University of Georgia law professor Elizabeth Burch, and raises questions over whether future plaintiffs who may not be sick yet are getting a fair shot at pressing claims that Roundup caused their illnesses.