German pharmaceutical and chemical giant Bayer announced a landmark agreement regarding legal claims in the United States. The subsidiary Monsanto will allocate up to $7.25 billion to end the years-long dispute over the alleged carcinogenicity of the herbicide Roundup. This settlement, spread over more than two decades, aims to resolve both current and future class-action lawsuits concerning non-Hodgkin lymphoma, which has been met with an enthusiastic reaction from financial markets and a rise in the company's stock.
Billion-Dollar Compensation Fund
Bayer will allocate a maximum of $7.25 billion to satisfy claims from current and future plaintiffs in the Roundup herbicide case in the USA.
Long-Term Payment Perspective
The implementation of the agreement has been planned for a period of up to 21 years, which is intended to protect the interests of shareholders and stabilize the legal situation of Monsanto.
Investor Enthusiasm on the Stock Market
The conglomerate's stock price on the Frankfurt stock exchange jumped by approximately 7.35%, as the market viewed the settlement as an opportunity to end costly disputes.
The German conglomerate Bayer announced on Tuesday the conclusion of a comprehensive settlement in the United States, which is to end the multi-year legal dispute concerning the popular weedkiller Roundup. According to the agreement reached, the giant's subsidiary Monsanto will pay a total of up to $7.25 billion over the next 21 years. These funds will be allocated as compensation for individuals diagnosed with non-Hodgkin lymphoma, allegedly caused by exposure to glyphosate. The scale of the proposed settlement is enormous, yet it represents an attempt to definitively close the litigation risk that has burdened the company since the acquisition of Monsanto in 2018. The plan envisions annual, decreasing payments, which is intended to allow the conglomerate to maintain financial liquidity while securing claims from potential new plaintiffs. It is worth emphasizing that this agreement must still be approved by a court in St. Louis, Missouri. The market reacted to this news with optimism – the company's stock price rose by nearly 7%, reflecting investors' hopes for an end to the costly legal battle that has already consumed billions of dollars and significantly reduced the company's market capitalization. Bayer acquired the American Monsanto in 2018 for $63 billion. This transaction, hailed as one of the largest acquisitions in the history of German business, quickly became a reputational and financial burden due to the avalanche of lawsuits concerning Roundup's safety. Previous attempts to settle disputes, including a 2020 settlement worth nearly $10 billion, did not resolve the issue of future claims in a lasting manner. The new class settlement is intended to be a more stable structure, encompassing a long-term horizon. Although the World Health Organization classified glyphosate as probably carcinogenic, Bayer consistently maintains that the product is safe, and the settlement does not constitute an admission of guilt but is a pragmatic business decision. 7.25 mld $ — maximum settlement amount in the USAKey Parameters of Bayer: Total Payouts: 7.25, Monsanto Acquisition Cost (2018): 63.0, Previous Settlement (2020): 10.0[{"aspekt": "Time Horizon", "przed": "Short-term Funds", "po": "21-Year Claims"}, {"aspekt": "Settlement Nature", "przed": "Piecemeal Agreements", "po": "Nationwide Class Settlement"}]