Investors Fret Over Roundup Liability -- WSJ
15 May 2019 - 5:02PM
Dow Jones News
By Ruth Bender
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 15, 2019).
BERLIN -- Bayer AG shares resumed their monthslong fall on
Tuesday after the company was hit by a more-than $2 billion jury
award over its Roundup herbicide, marking a sharp escalation in the
chemical and drug giant's legal woes.
The shares were down 2.3% in Europe -- one of the worst
performers in the Frankfurt stock exchange's blue-chip DAX index,
which was trading up on the day -- after hitting a seven-year low.
The fall followed Bayer's third Roundup court defeat in 10 months.
A California jury on Monday awarded $2.055 billion to a couple who
blamed the weedkiller for causing their cancer, a significantly
higher amount than the two-digit million figures Bayer is facing in
previous cases.
The verdict overshadowed the first positive news from Bayer in
weeks. On Monday, the company said it had reached an agreement to
sell its Coppertone sunscreens for $550 million, the first of a
series of emergency restructuring measures it planned late last
year in an effort to convince increasingly skeptical investors that
it has its drugs-to-crops business under control.
Without a court win so far, Bayer has been stuck in a downward
spiral, with each new verdict against it pushing its stock lower as
shareholders struggled to compute the total scale of the company's
potential liabilities surrounding Roundup.
"Sentiment is stuck in the mud," said Citi analyst Peter
Verdult, who is now pinning his hopes on the next Roundup trial in
St. Louis, which will be the first to take place outside the San
Francisco Bay Area, often seen as an unfavorable setting for
corporate defendants.
"A positive development of the group's business probably won't
have an effect on valuation in the short term," analysts from DZ
Bank wrote.
Bayer is appealing all verdicts. The company argues Roundup and
its active ingredient glyphosate are safe to use. It hopes to win
on appeal, where judges will look over the cases.
After the first verdict, Bayer obtained a substantial reduction
in the amount of the award and analysts were optimistic Tuesday
that this week's $2 billion award would be reduced too.
Gunther Zechmann from Bernstein research said he expected
Monday's award, which included $2 billion in punitive damages, to
conclude at $110 million.
Still, the amount granted by the jury this week could make the
13,400 total plaintiffs that Bayer still faces more hesitant to
reach a settlement "given the prize available through winning their
case," Mr. Zechmann said.
Some investors would like to see Bayer settle sooner rather than
later to get clarity over the future of the company.
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
May 15, 2019 02:47 ET (06:47 GMT)
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