Bayer May Pay $10B to Settle Roundup Cancer cases from its Monsanto Deal

In an effort to settle tens of thousands of claims that Bayer AG’s Roundup weedkiller causes cancer, lawyers for some plaintiffs are discussing with the company deals that could lead to a total payout of about $10 billion, according to people with direct knowledge of the negotiations.

Source: Fortune, Bloomberg | Published on January 24, 2020

Bayer fights Roundup verdicts

In some discussions, Bayer’s lawyers have said the chemical maker will set aside $8 billion to resolve current cases and reserve $2 billion for future claims, the five people said. Roundup has been blamed for ailments including non-Hodgkin’s lymphoma, which can take years to diagnose. Bayer declined to comment on the numbers or any terms under negotiation.

Bayer shares rose as much as 3.9% Friday in Frankfurt, the most since October. They’re still down about 23% since the company acquired agricultural giant Monsanto Co. for $63 billion, giving it Roundup. The collapse has wiped about $18 billion off Bayer’s market value.

If a settlement of the litigation costs Bayer $10 billion, its shares could rise quickly to 90 euros from the current level of about 76 euros, Markus Mayer of Baader Bank said by email Friday morning.

To be sure, the $10 billion figure isn’t final and could change as talks continue, said the people, who asked not to be identified because they weren’t authorized to speak publicly about the discussions.

Ken Feinberg, the lead mediator for the cases, has indicated deals resolving as many as 85,000 Roundup claims in the U.S. may be reached within a month. Feinberg said he’s unaware of the numbers being discussed in settlement talks. The talks are taking place between company lawyers and separate groups of plaintiffs’ attorneys, each with a sizable inventory of cases.

While Feinberg said in an email he remains optimistic, “any details about what may constitute a comprehensive agreement are pure speculation as to both dollars and eligibility criteria.”

Chris Loder, a U.S.-based spokesman for the company, has said the figure cited by Feinberg is “a speculative estimate” that includes “potential plaintiffs” who haven’t filed court complaints and that “the number of served cases as reported on a quarterly basis remains significantly below 50,000.”

“The mediation process is continuing diligently and in good faith to explore resolution under the auspices of Ken Feinberg,” Loder said Thursday. “There is also no certainty or timetable for a comprehensive resolution.”

Read More: Bayer’s Roundup Challenge Is to Avoid Another ‘Nuclear’ Jury Verdict

Roundup claims have surged since a trio of jury verdicts awarded plaintiffs almost $2.5 billion, increasing pressure on Bayer to settle. While several trials due to start this month have been postponed to give more time for negotiations, cases in Missouri and California got underway this week. Bayer is appealing the earlier verdicts, which judges have already slashed to $191 million.

Analyst estimates vary on how much a deal could cost. Bloomberg Intelligence analyst Holly Froum said this week it could take $10 billion to $13 billion. Thomas Claps, a litigation analyst with Susquehanna Financial Group, forecast $4.5 billion to $6.5 billion.

The St. Louis case, involving claims by four former Roundup users, is the first to be tried outside California. The city is regarded as a plaintiff-friendly venue -- a jury there awarded more than 20 women $4.7 billion in 2018 over claims Johnson & Johnson’s baby powder gave them cancer. J&J has appealed.

Bayer has steadfastly maintained that glyphosate, the active ingredient in Roundup, is not a carcinogen. The U.S. Environmental Protection Agency concluded it doesn’t require a cancer warning, something state regulators had advocated. But plaintiffs point to other research that shows glyphosate can cause non-Hodgkin’s lymphoma and multiple myeloma.

Feinberg, who was appointed in May to lead the settlement talks, has asked retired judges to serve as mediators in direct negotiations between Bayer’s attorneys and groups of plaintiffs’ lawyers, the people said. The strategy could produce a lower total settlement cost for Bayer than had it continued to seek a formal, global deal.

But the company will need to make sure to address all claims as it would still have to fight the remainder in court, said Perry Weitz, a New York-based plaintiffs attorney whose firm is involved in the two trials underway. He declined to comment on any figures being discussed in the settlement talks.

Defense attorneys have told plaintiffs’ lawyers Bayer won’t settle wrongful-death claims that are more than 10 years old and only will settle claims of non-Hodgkin’s lymphoma, according to a summary of the company’s settlement criteria seen by Bloomberg News. Some Roundup users are blaming their multiple myeloma cancers on the product.

Some of Bayer’s lawyers also warned the company is prepared to put Monsanto into bankruptcy to deal with the wave of Roundup suits if it feels reasonable deals can’t be reached, people have said. Other companies faced with crippling litigation -- such as Purdue Pharma LP -- have taken that path.

The case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).