Bayer AG, after more than a year of talks, has agreed to pay as much as $10.9 billion to settle thousands of U.S. lawsuits claiming that its widely used weedkiller Roundup caused cancer, resolving litigation that has pummeled the company’s share price.
The German agribusiness giant’s announcement on Wednesday also said it was settling claims regarding two other products: It would pay $820 million to resolve complaints about the production of PCB, a commercial and industrial chemical, and up to $400 million toward lawsuits against the herbicide dicamba, which suits claimed drifted off farm fields and killed neighboring crops.
The complaints are largely inherited from Bayer’s $63 billion purchase of Creve Coeur-based Monsanto in 2018.
Some in St. Louis quickly applauded the move.
“I think the farm community is going to be very happy with the settlement,” said Don Downing, a lead lawyer in federal dicamba litigation who helped with settlement negotiations. “Most farmers are not very litigious people.”
The dicamba-related settlement applies to U.S. soybean farmers who can demonstrate reduced crop yields and damage from the chemical suffered during the 2015 through 2020 growing seasons. The agreement does not affect the lawsuit from a Missouri peach farmer whom a jury awarded $265 million in February — including $250 million in punitive damages — after lawyers argued that his orchard was harmed by dicamba. That verdict is being appealed.
Downing, an attorney from the St. Louis law firm Gray, Ritter and Graham, said Bayer may say the settlements are not an acknowledgment of product flaws.
“But my reaction would be that their actions speak for themselves,” he said.
Company officials, though, said on Wednesday that Roundup and dicamba not only remain vital products on the market, but are also foundations of future technologies in its research and development pipeline.
“We have not wavered about their safety and their benefits,” Lisa Safarian, the president of Bayer Crop Science North America, told the Post-Dispatch. “We’re not backing away from these in any way.”
Safarian said that the company’s expenditures through the settlements would not disrupt any of its operations, including those in the St. Louis region. If anything, she and other company officials suggested that Bayer’s workforce can now “look forward” without courtroom distractions and uncertainties.
The German drugs and pesticides maker has come to terms with about 75% of the 125,000 filed and unfiled Roundup claims overall, it said in a statement on Wednesday.
The settled cases over Roundup and other glyphosate-based weedkillers account for about 95% of those currently set for trial, it added.
“The Roundup settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end,” Bayer Chief Executive Werner Baumann said in the statement.
The company said it will make a payment of $8.8 billion to $9.6 billion to resolve the current Roundup litigation — including an allowance expected to cover unresolved claims — and $1.25 billion to support a separate class agreement to address potential future litigation.
“Bayer is not getting complete relief, but trying to do as much as it can to calm uncertainty,” said Adam Zimmerman, a law professor at Loyola Law School who has followed the litigation. He called the deal creative, adding, “I can see how it’s attractive for Bayer.”
The deal dwarfs previous out-of-court product liability settlements, such as Merck & Co’s $5 billion deal to end litigation over its withdrawn painkiller Vioxx, and Bayer deals worth $2 billion to settle claims of harm caused by its Yasmin and Yaz birth control pills.
Ken Feinberg, who was appointed settlement mediator by a federal judge more than a year ago, said that while nearly 25,000 claims remained unsettled there will be no more trials as cases settle in coming months.
“Bayer wisely decided to settle the litigation rather than roll the dice in American court,” said Feinberg, who has mediated other high-profile disputes, including over the September 11th Victim Compensation Fund, the BP Deepwater Horizon disaster and Volkswagen’s diesel emissions scandal.
Bayer said in February it did not need to write down Monsanto’s value in its books if it has to spend $10 billion on a settlement, reflecting the average analyst estimate at the time.
Roundup appeals to continue
The three cases that have gone to trial will continue through the appeals process and are not covered by the settlement, Bayer said.
A U.S. federal appeals court on Monday blocked California from requiring that Bayer label glyphosate-based Roundup with a cancer warning.
That ruling, which permanently bars California from requiring a cancer warning on glyphosate-based products, is separate from the wider litigation over whether Roundup causes a type of blood cancer.
The company, whose management in April regained shareholder support for its handling of the litigation, has denied claims that Roundup or its active ingredient glyphosate causes cancer, saying decades of independent studies have shown the product is safe for human use.
Bayer said it expects to maintain its investment grade credit ratings and intends to keep its dividend policy.
Before the decision to settle, Bayer contemplated continuing to litigate cases, but a risk assessment concluded that additional trials were not worth the financial and reputational risk, the company said.
Monsanto began selling Roundup in 1974, and while the formulation is no longer patent protected, Roundup remains widely available.
Bayer shares are down 29% since it closed the Monsanto deal in June 2018. At one point last year as juries ruled against the company, Bayer’s market value had fallen below what it paid for Monsanto.
Following Wednesday’s announced settlement, Bayer leaders were asked on a media call if the acquisition was worth it.
“The combination was always built on what both companies can do in the future, together,” said Baumann. “That has not changed a bit. ... We are more convinced than ever that this combination is going to have a great future.”
Some outsiders say Bayer’s future is helped by further distancing itself from Monsanto’s past, and its apparent effort to “start from scratch.”
“It does look like Bayer is attempting to get rid of the legacy lawsuits that it inherited from Monsanto,” said Paul Lesko, a St. Louis-based attorney involved with dicamba litigation. “I think it’s very positive and hopefully speaks well for Bayer in the future. ... This is maybe a step in rebranding or repackaging.”
Bayer has repeatedly said Roundup is safe and important to farmers who use the herbicide in combination with the company’s genetically modified seeds; Bayer will continue selling Roundup without a cancer warning label, a company spokesman said.
Potential future cases will be governed by an agreement, subject to court approval, which includes the creation of an independent Class Science Panel. The Class Science Panel will determine whether Roundup can cause cancer and if so, at what minimum levels.
The settlement provides “a process to stop everything while the scientific claims are established,” Loyola’s Zimmerman said.
Reuters and Bryce Gray of the Post-Dispatch contributed to this report.