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Updated at 9:30 a.m. 

A California jury’s verdict, directing Bayer to pay more than $2 billion in damages to a couple that claimed they got cancer as a result of using Roundup weedkiller, raises pressure on the company to settle thousands of similar lawsuits.

The award — the largest in the U.S. so far this year — prompted some analysts on Tuesday to boost their estimates on the value of a settlement.

Bayer’s third Roundup court loss, announced Monday, comes two weeks after shareholders disavowed Chief Executive Officer Werner Baumann at a meeting in Germany, lambasting his handling of the $63 billion acquisition last year of Creve Coeur-based Monsanto. The verdict puts the onus on Bayer to alter its defense course and consider a settlement: litigation concerns have eroded Bayer’s value by more than 40 percent since the deal was sealed in June.

The stock declined 2.3 percent Tuesday after initially dropping to a seven-year low. Analysts at Bloomberg Intelligence raised their estimate for a settlement value to as much as $10 billion, up from a peak of $6 billion.

“The company has got to come to the table with a viable plan to resolve these cases, or the losses are going to mount,” Micah Dortch, managing partner at the Potts Law Firm in Dallas who has filed dozens of Roundup cases, said by email. “This outcome should make Monsanto realize the seriousness of these claims and how a jury perceives the evidence.”

Bayer vowed to challenge Monday’s ruling, calling it “excessive and unjustifiable.” Bayer has defended the safety of Roundup’s active ingredient glyphosate since inheriting the product from Monsanto.

The verdict “conflicts directly with the U.S. Environmental Protection Agency’s interim registration review decision released just last month,” Bayer said. “The consensus among leading health regulators worldwide that glyphosate-based products can be used safely and that glyphosate is not carcinogenic.”

A jury in state court in Oakland, Calif., issued the verdict after two other California trials over the herbicide yielded combined damages of $159 million against the German company. Bayer is scheduled to defend against similar claims this summer in St. Louis County.

When the company’s lawyer asked a juror after the verdict what the panel wanted to hear from Bayer, the juror responded that he wanted proof the chemical was safe: “I wanted you to get up and drink it.” The juror declined to be identified.

The jurors agreed that Alva and Alberta Pilliod’s exposure to Roundup used for residential landscaping was a “substantial factor” in their non-Hodgkin’s lymphoma. In addition to $1 billion for each spouse, the jury awarded damages of about $55 million for the couple’s medical bills and pain and suffering.

The verdict will be vulnerable to a legal challenge by Bayer because courts have generally held that punitive damages shouldn’t be more than 10 times higher than compensatory damages.

Monsanto is the named defendant in similar U.S. lawsuits filed by at least 13,400 plaintiffs.

“The verdict in this trial has no impact on future cases and trials, as each one has its own factual and legal circumstances,” Bayer said.

“Near-term sentiment is terrible,” Peter Verdult and Andrew Baum of Citigroup wrote in a note to clients. The legal risks priced into the stock have reached about 30 billion euros, they said.

Markus Mayer, an analyst at Baader Bank AG, said the ruling increases the probability that Bayer becomes vulnerable to a takeover or a target for more activist investors like Paul Singer’s Elliott Management Corp. pushing for a split between agriculture and health assets.

While it was a “risky move” to ask for an award of more than $1 billion — and the damages will probably be reduced by the judge — the three verdicts against Bayer show jurors are convinced by evidence against the company, said Anna Pavlik, senior counsel for special situations at United First Partners in New York.

“There appeared to be more detailed evidence damaging to Monsanto, which strengthens plaintiffs’ cases down the pipeline even further,” said Pavlik, who has followed the trials.

The Pilliods’ lawyer urged jurors to punish the company for covering up the health risks of the herbicide for decades. Brent Wisner told the panel his punitive damages request was roughly based on the gross profit of $892 million recorded in 2017 by Monsanto’s agricultural-chemicals division.

After the verdict, the attorney said the evidence showed that “from day one, Monsanto has never had any interest in finding out whether Roundup is safe.”

Bloomberg’s Margaret Cronin Fisk contributed.


Our earlier story, from Reuters, posted at 4:44 a.m.

FRANKFURT, Germany — Shares in Bayer fell as much as 5 percent on Tuesday after a jury awarded more than $2 billion to a California couple in the largest U.S. jury verdict against the company over allegations its Roundup weed killer causes cancer.

That put the stock on course to close at its lowest level in almost seven years, even though the punitive damages award is likely to be reduced due to U.S. Supreme Court rulings that limit punitive compensatory damages.

The jury set the total punitive damages at $2 billion and added $55 million in compensatory pay, concluding that Roundup — based on herbicide glyphosate — had been defectively designed, and that the company failed to warn of the herbicide’s alleged cancer risk.

The shares were down 2.5 percent at 55.05 euros at 0905 GMT (4:05 a.m. Central).

Bayer said in a statement on Monday that it was disappointed with the verdict and would appeal. A spokesman called the jury’s decision "excessive and unjustifiable."

It was the third consecutive U.S. jury verdict against the company in litigation over the chemical, which Bayer acquired as part of its $63 billion purchase of Creve Coeur-based Monsanto last year.

"Clearly we anticipate that much of the punitive damages of $2 billion would likely be significantly reduced on appeal," JP Morgan analysts said in a note.

"However, the level of compensatory damages is still likely to be somewhat of a concern to the market given the level is above the Hardeman case," they added, referring to $5 million in compensatory damages awarded to a plaintiff in a previous case.

The brokerage said the litigation slashes its valuation of the company by 5 billion euros ($5.6 billion) but it will take until mid-2020 for more cases and a couple of appeal decisions to provide greater clarity.

Bayer, inventor of Aspirin and maker of stroke prevention drug Xarelto and Yasmin birth control pills, faces U.S. lawsuits from more than 13,400 plaintiffs over the herbicide’s alleged cancer risk.

The group’s market value has fallen below what Bayer paid for Monsanto after shedding about 40 billion euros since the first jury verdict last August.

The U.S. Environmental Protection Agency this month reaffirmed that glyphosate was safe to use. The European Chemicals Agency and other regulators around the globe have also found glyphosate not likely to be carcinogenic to humans.

The World Health Organization’s International Agency for Research on Cancer, however, concluded in 2015 that the chemical probably causes cancer.

Bayer, which was chided by investors for the stock rout at the annual general meeting this month, has said that the litigation had had no effect on strong demand from U.S. lawn and garden owners for its glyphosate-based herbicides, adding that demand from U.S. farmers continued to be driven by the weather.

Under a push to divest assets including its animal health division, Bayer late on Monday said it had agreed to sell U.S. sun care brand Coppertone to Nivea owner Beiersdorf, for $550 million.

In further fallout from the takeover, Bayer said on Monday that Monsanto, which is being investigated by French prosecutors for compiling files of influential people such as journalists and scientists in France, likely did the same across Europe, suggesting a potentially wider problem.

($1 = 0.8898 euros) 

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