国产一福利

After years of legal setbacks that have cost billions of dollars over its top-selling Roundup weedkiller, Bayer AG finally got a resounding win in the biggest tribunal of all.

The US Supreme Court threw out a jury verdict won by a Missouri man who blamed Roundup for his non-Hodgkin lymphoma. Backing Bayer’s appeal, the court said on June 25 that consumers can’t sue Bayer for the absence of a cancer warning on its label, given that federal regulators concluded a cautionary statement wasn’t necessary.

Bayer’s shares closed up nearly 19% June 25, the most since 2003, as investors hailed a decision that could stem the tide of big-dollar verdicts, even if it doesn’t completely solve the company’s Roundup problem. They were down as much as 1.9% in early trading in Frankfurt on Friday.

“Finally common sense has prevailed as regulators, who are in tune with the technical and scientific issues, are in a better position to determine what is safe than juries,” said David Herro, a portfolio manager at Harris Associates, which is one of Bayer’s five biggest shareholders.

Litigation over Roundup had wiped out more than $60 billion in market value since Bayer inherited the world’s most widely-used weedkiller through its purchase of agrochemical producer Monsanto in 2018. Once an icon of German industry, Bayer has struggled to get a grip on the crisis through successive management regimes.

Problems with Bayer’s crop-science division have also weighed on the company’s ability to boost the performance of its other units, including the pharmaceutical business. Current Chief Executive Officer Bill Anderson’s turnaround plan has focused on resolving the conglomerate’s legal woes while also cutting bureaucracy.

The stakes are also high for Anderson personally. The American took the helm of Bayer in mid-2023, tasked with bringing a close to the protracted litigation that’s already cost the company more than $10 billion. He has vowed to largely contain the situation by the end of 2026. Shareholders made clear that his ability to succeed will weigh heavily on how they judge his future at the company.

Anderson welcomed the Supreme Court ruling, saying it “brings overdue justice on an issue that should have been clarified much earlier.” He also acknowledged that “the toll to get here has been massive” and that the litigation has “impacted public trust.”

“This litigation has cost thousands of jobs and billions of dollars that could have gone toward new medicines or new seeds,” he wrote in a on social media. “It should never happen again.”

While the Supreme Court decision is a big win for Bayer, Anderson has yet to secure final approval for his $7.25 billion settlement proposal. His predecessor, Werner Baumann, in 2020 unveiled a sweeping proposal that resolved many existing claims, but a federal judge later rejected a key element aimed at handling future claims, leaving Bayer exposed to more lawsuits and billion-dollar verdicts.

The Supreme Court victory is a “significant milestone” for Bayer, according to Markus Manns, a portfolio manager at Union Investment, a shareholder.

Current Lawsuits

While the ruling will make it more difficult for consumers to win Roundup cases, it won’t knock out the thousands of current lawsuits over the weedkiller or affect future lawsuits, US legal experts say.

The latest ruling is “not dispositive of any pending or future pesticide claims against any manufacturer, including Monsanto,” said Thomas Kline, a Philadelphia-based plaintiffs’ lawyer who won a $2.25 billion Roundup verdict against Bayer in January 2024. That verdict was later reduced and settled for an undisclosed amount.

Roundup cases can proceed on other grounds, including that the weedkiller was defectively designed and Bayer was negligent in its development and marketing, said Carl Tobias, a University of Richmond law professor who teaches about mass-tort cases.

“Juries can still hand down billion-dollar verdicts against Bayer on grounds other than failure-to-warn,” Tobias said. “This is not the silver bullet Bayer was looking for to end all Roundup litigation.” Tobias also noted the Supreme Court specifically ruled in 2005 that claims other than failure to warn specifically weren’t preempted by federal law.

The Supreme Court ruling will bolster Bayer’s $7.25 billion class-action settlement proposal pending in state court in St. Louis. The offer is designed to resolve Roundup suits that already have been filed and potential claims that could be filed over a 21-year period, according to court filings.

The ruling may help Bayer cap its financial exposure to the current 65,000 Roundup suits the company faces at $7.5 billion, Bloomberg Intelligence’s Holly Froum said Thursday in a note to customers.

Tom Claps, a managing director at the institutional research and advisory firm Gordon Haskett, noted the Supreme Court decision should “incentivize plaintiffs to participate in Bayer’s settlement as their cases have now been massively weakened.”

But the deal has been by a federal judge overseeing all Roundup litigation filed in US federal courts, saying its so-called opt-out terms were “mind boggling.” He said ex-Roundup users may be able to press their claims in his court since they wouldn’t be barred by the flawed state-court settlement.

Plaintiffs contend Roundup’s active ingredient, glyphosate, causes cancer, which Bayer has consistently and vehemently denied. In some of the cases that have gone to trial, juries have awarded big-dollar verdicts to users of the weedkiller who sued. Juries have ruled against plaintiffs in other cases and some awards have been thrown out on appeal.

The US Environmental Protection Agency has found glyphosate “unlikely to be a human carcinogen” and hasn’t required a cancer warning be added to the product label. Still, Bayer removed its glyphosate-based version from the US residential market in 2023.

By reducing Bayer’s glyphosate litigation risk, the Supreme Court’s decision may allow the company to restore its dividend in the 2027 fiscal year, analysts at Barclays led by Charles Pitman-King wrote in a note. However, many “generalist investors continue to see Bayer as uninvestable until the litigation overhang” has been fully addressed, he said.

Photo: Photo credit: Daniel Acker/Bloomberg