Bayer committed to Monsanto integration, despite Roundup lawsuit
A jury awarded R289m to a man who says the glyphosate-based weed killer gave him cancer, but Bayer says growing conditions, not a court case, still inform demand for the product
Berlin — Bayer CEO Werner Baumann said the company is "fully committed" to integrating recent acquisition Monsanto, despite a $289m jury award and a rising wave of lawsuits seeking to link its weed-killer Roundup with cancer.
There is "an awful lot of excitement and enthusiasm" at Bayer about the $66bn Monsanto purchase, Baumann said on a conference call on Thursday. He reiterated that the company believes the jury decision is "wrong" and "inconsistent with the robust science-based conclusions of regulators and health authorities worldwide".
"Nothing has changed concerning our strategy, attractive synergy potential and longer-term growth and margin expectations for our combined crop-science business," Baumann said. "We are very optimistic."
Some 8,000 lawsuits had been filed over glyphosate, the main ingredient in Roundup, as of the end of July, Bayer said on Thursday. That compares to the 5,200 complaints previously disclosed, and the number will almost certainly keep climbing after the August 10 ruling in California.
Bayer has said it will appeal the $289m decision in favour of a school grounds keeper who argued that exposure to Roundup caused his non-Hodgkin’s lymphoma. US jury awards against companies are often overturned or reduced. Even so, the German company could still face as much as $5bn in costs linked to glyphosate cases, analysts at Sanford C Bernstein estimate.
The California verdict shocked observers both inside and outside Bayer, erasing $16bn from the company’s market value in a week. On Thursday, the stock fell as much as 1.9% and was down 1.6% at €82.14 at 4.17pm in Frankfurt trading.
Baumann said on the conference call that he is confident Bayer’s legal resources will help it defend glyphosate and that any appeal in the Roundup case will likely take "a year or longer". The company isn’t earmarking any funds to settle Roundup cases. When asked about how much money it’s setting aside to defend the herbicide in court, Bayer deferred to September 5, when the company reports second-quarter earnings.
"We want to make sure that glyphosate continues to be available to our key stakeholders as an excellent, safe and very important tool for modern agriculture," Baumann said.
Thus far, the legal travails haven’t dimmed demand for the herbicide, said Liam Condon, head of Bayer’s agriculture unit, adding that the jury award has no bearing on regulators’ decisions about the product. "Demand for glyphosate depends on the growing conditions, and not a jury decision in California."