BAYER has announced it will pay out US$8.8 billion to US$9.6 billion to resolve current glyphosate herbicide litigation actions, including an allowance to cover unresolved claims, and US$1.25 billion to support a separate class agreement to address potential future litigation.
The move will bring closure to about 75 per cent of the current Roundup liability claims in the United States involving about 125,000 filed and unfiled claims overall. It will also establish a framework for resolving the remainder of the pending litigation.
The agreement is subject to approval by Judge Vince Chhabria of the US District Court for the Northern District of California.
The decision was approved unanimously by Bayer’s Board of Management and Supervisory Board which emphasised the agreement contained no admission of liability or wrongdoing.
Bayer maintains that the extensive body of science indicates that Roundup does not cause cancer, and therefore, is not responsible for the illnesses alleged in the litigation.
Clearing the decks
Bayer chief executive officer, Werner Baumann, said the Roundup settlement was the right action at the right time for Bayer to bring a long period of uncertainty to an end.
“It resolves most current claims and puts in place a clear mechanism to manage risks of potential future litigation. It is financially reasonable when viewed against the significant financial risks of continued, multi-year litigation and the related impacts to our reputation and to our business,” he said.
“The decision to resolve the Roundup litigation enables us to focus fully on the critical supply of healthcare and food. It will also return the conversation about the safety and utility of glyphosate-based herbicides to the scientific and regulatory arena and to the full body of science.”
The agreements will resolve the vast majority of the current litigation in US federal and state courts, including both plaintiffs with filed cases and parties who have retained counsel but not yet filed their claims in court.
Those participating in the settlement will be required to dismiss their cases or agree not to file.
Bayer said claims still subject to negotiation largely consisted of cases generated by television advertising and for which plaintiffs’ law firms had provided little or no information on the medical condition of their clients, and/or cases held by law firms with small inventories.
The three cases that have gone to trial in the US – Johnson, Hardeman and Pilliod – will continue through the appeals process and are not covered by the settlement.
The company said it would continue with these cases as the appeals “would provide legal guidance going forward”.
Bayer inherited the litigation claims when it purchased Monsanto for $63 billion in 2018, taking on the legacy of lawsuits against the company’s main glyphosate-based product, Roundup.
Bayer says it is well placed to support the payouts from funding sourced from existing surplus liquidity, future free cash flows, the proceeds from the Animal Health divestment, and additional bond issuances, and that the action will not affect the availability of its glyphosate-based products.
The company assumes that the potential cash outflow will not exceed US$5 billion in 2020 and US$5 billion in 2021, and the remaining balance will be paid in 2022 or thereafter.
In separate but related issues, Bayer has also reached a resolution to dicamba herbicide drift litigation and PCB (polychlorinated biphenyl organic chlorine compound) water litigation claims, which are another legacy of Monsanto legal matters in the US.
The company has resolved the dicamba drift litigation for payment of up to US$400 million and most PCB water litigation exposure for payment of approximately US$820 million.