BAYN Bayer AG

Seller of Roundup blames surge on an advertising push by plaintiff lawyers

By Ruth Bender 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 31, 2019).

BERLIN -- Bayer AG said the number of plaintiffs claiming its Roundup herbicides caused cancer more than doubled to 42,700 in the past three months, adding pressure on the company to resolve the legal battle that has raised questions about its future.

The chemicals-to-pharmaceuticals company was thrown into one of the worst crises in its 156-year-old history after its $63 billion acquisition of Roundup inventor Monsanto Co. last year opened it up to thousands of lawsuits about the herbicides.

Since August 2018, three juries have found the products caused non-Hodgkin lymphoma, chopping roughly 30% off Bayer's market value.

On Wednesday, the stock rose 2% after the company posted better-than-expected sales and profit for the third quarter.

"Bayer is on track, both operationally and strategically," Chief Executive Werner Baumann said.

Mr. Baumann, who has faced heavy criticism from shareholders, highlighted progress the company has made in selling assets, improving profitability and strengthening oversight of its legal strategy.

The increase in Roundup plaintiffs, from 18,400 in early July, comes as their lawyers and Bayer discuss a potential settlement. Some investors, including activist hedge fund Elliott Management Corp., have urged Bayer to consider settling.

Bayer had warned about a sharp rise in plaintiffs earlier in October, but played down the significance, saying the numbers said nothing about the size of any settlement payment or the merits of the claims. It blamed the rise on an advertising push by lawyers seeking to recruit more plaintiffs before any settlement is reached.

Besides engaging "constructively" in settlement talks, Bayer has continued to defend itself in appeals and would do so in any new trial, Mr. Baumann told reporters Wednesday.

Bayer has argued that Roundup and its active ingredient glyphosate are safe and that this view is backed by hundreds of regulatory decisions around the world.

While some investors worry that the growing number of plaintiffs could push up the final bill for Bayer, they also hold out the hope that a settlement will be reached -- a prospect that has helped the stock recover slightly since the start of this year. Several trials scheduled to take place this summer and fall have been delayed, suggesting that settlement talks are moving forward.

"We continue to think that a settlement is the most likely and beneficial outcome for investors," Bernstein Research said in a client note. Baader Bank's Markus Mayer said a settlement below $20 billion would be a positive share-price trigger.

Settling Bayer's legal liabilities is complicated, especially as Roundup continues to be sold in stores, making it hard for the company to achieve an agreement that would prevent future plaintiffs from coming forward.

Mr. Baumann repeated Wednesday that the company would only agree to a "financially reasonable" settlement. He slightly changed tone on his view that any settlement should reach "finality," saying it must come as close as possible to that goal.

Mr. Baumann declined to comment on the current state of the talks. According to a person familiar with the mediation discussions, Bayer and plaintiff lawyers are still far apart on the amount and scope of a potential settlement.

The spike in plaintiffs has made a resolution even more challenging, as Bayer faces more plaintiff lawyers, said Thomas Claps, a litigation analyst for Susquehanna Financial Group.

Meanwhile, Bayer's business is improving. Sales in its crop-science unit recovered from weakness in the second quarter, growing 5.8% from a year earlier to EUR3.95 billion ($4.4 billion) on strength in Latin America and North America. Overall sales rose to EUR9.8 billion, slightly beating analysts' expectations, according to estimates from FactSet. The number excludes the company's animal-health business, which it is selling to Elanco Animal Health Inc.

Sales in the pharmaceuticals unit, which counts for a little more than half of group sales, rose 8.2% to EUR4.5 billion, driven mostly by its two blockbuster drugs, blood thinner Xarelto and eye treatment Eylea.

Net income dropped 65% to EUR1 billion, due mostly to a large divestment gain recorded in the comparable period last year.

Bayer confirmed its full-year outlook of a 4% rise in sales. In July, the company warned that severe weather affecting its crop-science division could put its sales target out of reach.

Sara Randazzo contributed to this article.

Write to Ruth Bender at Ruth.Bender@wsj.com

(END) Dow Jones Newswires

October 31, 2019 02:47 ET (06:47 GMT)

Bayer (TG:BAYN)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024

Bayer (TG:BAYN)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024