Bayer Reports Surge in Roundup Plaintiffs -- Update
30 Ottobre 2019 - 1:10PM
Dow Jones News
By Ruth Bender
BERLIN -- Bayer said the number of plaintiffs claiming its
Roundup herbicides caused cancer had more than doubled to 42,700 in
the past three months, adding pressure on the
chemicals-to-pharmaceuticals company to resolve the legal battle
that has raised questions about the company's future.
Bayer 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, only to face thousands of lawsuits
about the herbicide.
Since August 2018, three juries have found Bayer's products
caused non-Hodgkin lymphoma in people, chopping roughly 30% off the
company's market value.
But while uncertainty over the outcome of the legal battle
continues to cloud the company's future, Bayer shares rose more
than 2% in early trading Wednesday after the company posted
better-than-expected third-quarter sales and profit.
"Bayer is on track, both operationally and strategically," Chief
Executive Werner Baumann said on a conference call. Mr. Baumann,
who has faced heavy criticism from shareholders angry with their
recent losses, highlighted progress the company has made on selling
assets, making its business more profitable and boosting oversight
of the legal strategy.
The new spike in plaintiffs, from 18,400 in early July, comes as
Bayer and plaintiff lawyers discuss a potential settlement. Some
investors, including activist hedge fund Elliott Management Corp.,
have urged Bayer to consider a settlement.
Bayer had warned about a sharp rise in the number of plaintiffs
earlier this month. But it played down its significance, saying the
numbers said nothing about the merits of the claims and blaming the
latest spike on an advertising push by lawyers seeking to recruit
more plaintiffs before any settlement is reached. Still, some
investors worried the new surge would increase uncertainty over the
total liability Bayer could face.
Besides engaging "constructively in settlement talks", Bayer had
continued to defend itself in appeals and would do so too in any
new trial, Mr. Baumann told reporters. He said seven to eight
trials were scheduled for the first quarter of 2020.
Bayer has been arguing vigorously that Roundup and its active
ingredient glyphosate are safe and that this view is backed by
hundreds of regulatory decisions around the world.
Investors' hopes of a settlement have helped the stock recover
slightly since the start of this year. Several trials scheduled to
take place this summer and fall have been delayed, fueling hopes
that settlement talks are moving ahead.
"We continue to think that a settlement is the most likely and
beneficial outcome for investors," said Bernstein Research in a
note to clients. Baader Bank's Markus Mayer said a settlement below
$20 billion would be a positive share-price trigger.
Reaching a settlement is complicated. Mr. Baumann repeated
Wednesday that the company would only agree to a settlement that is
"financially reasonable" and that comes as close as possible to
preventing future plaintiffs from filing suits. He declined to
comment on the current state of talks.
Finding a way to prevent future claims on a product that remains
on sale and that regulatory bodies across the world deem safe is
one of the sticking points in mediation talks, Bayer's crop-science
chief, Liam Condon, said in a recent interview.
Bayer has felt emboldened in its defense since the U.S.
Environmental Protection Agency in August said it would no longer
allow labels claiming glyphosate was known to cause cancer, calling
this a "false claim" that misleads consumers. The EPA has found
repeatedly that glyphosate wasn't a carcinogen.
In the meantime, Bayer showed its business is improving. Sales
in its crop-science unit recovered from last quarter's weakness,
growing 5.8% to EUR3.95 billion ($4.4 billion), driven by growth in
Latin and North America.
This helped the company post an overall rise in sales to EUR9.83
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% in the quarter to EUR1.04 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,
reassuring analysts who had feared the targets might be dropped
after Bayer in July had warned that the severe weather that
affected its crop-science division could put its 2019 sales target
out of reach.
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
October 30, 2019 07:55 ET (11:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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