In the US German drugs and pesticides maker Bayer has agreed to pay as much as $10.9bn to settle thousands of legal actions that were taken as, it was claimed, the use of the weedkiller Roundup was leading to users developing cancer.
Of that settlement figure up to $5 billion will be paid out during 2020, with a further $5 billion to be paid out during 2021. This will be financed largely from the company’s existing free cash flow and the proceeds of the sale of its Animal Health business in 2019. Bayer also revealed that three cases that have already gone to trial will not be covered by the settlement.
This follows more than a year of talks and will result in Bayer addressing approximately 75% of the current Roundup-related compensation claims. Bayer had originally inherited the legal actions when it bought out Monsanto in 2018. This settlement includes approximately 125,000 filed and unfiled claims in total.
Former Roundup users claim that glyphosate is responsible for their non-Hodgkin’s lymphoma and other cancers. However, Bayer denies that glyphosate is a carcinogen and this contention is supported by the U.S. Environmental Protection Agency. As recently as this week a federal judge in California ruled that companies cannot be forced to place warning labels on glyphosate-based products.
The settled cases over the use of Roundup and other glyphosate-based weed killers account for about 95% of those currently set for trial. In relation to the compensation settlement Bayer chief executive Werner Baumann said: “The Roundup settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end.”
In addition to this it was revealed that the group will be making an overall payment of around $8.8-$9.6 billion to settle the current Roundup litigation. This figure includes $1.25 billion to support another class agreement in relation to possible future litigation and another allowance that will take into account unresolved claims.
Bayer, whose management in April regained shareholder support for its handling of the litigation, has refuted allegations that Roundup or its active ingredient glyphosate can lead to cancer, saying that many years of independent studies have indicated the product is safe for human use. The group said it expects to maintain its investment grade credit ratings and intends to keep its dividend policy.
Settlement mediator Ken Feinberg stated that, even though nearly 25,000 claims remained unsettled, there will be additional trials as cases settle in coming months. He said: “Bayer wisely decided to settle the litigation rather than roll the dice in American court.”
Monsanto introduced Roundup to the market during the 1970s. Bayer has committed to continue selling the weed killer and will not be voluntarily placing a cancer warning label on the product.