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Sweeping Bayer Settlements
By Todd Neeley
Friday, June 26, 2020 2:09PM CDT

OMAHA (DTN) -- Bayer has reached a multi-billion-dollar, wide-reaching settlement agreement on Wednesday to end Roundup cancer lawsuits, dicamba drift litigation and polychlorinated biphenyls, or PCB, water litigation.

Most notably, the company announced in a news release a total payment of between $8.8 billion and $9.6 billion to "resolve current and address potential future Roundup litigation."

By the company's estimates, the settlement will "bring closure" to about 75% of current Roundup litigation involving about 125,000 filed and unfiled claims.

The company will also pay up to $400 million to resolve litigation pending in the U.S. District Court for the Eastern District of Missouri on claims of crop injury and harm from Bayer's dicamba herbicide, XtendiMax.

Finally, the settlement package will direct about $650 million to address litigation on PCBs (polychlorinated biphenyls) in water.

"Cash payments related to the settlements are expected to start in 2020," the company stated in its press release on the settlements. "Bayer currently assumes that the potential cash outflow will not exceed $5 billion in 2020 and $5 billion in 2021; the remaining balance would be paid in 2022 or thereafter."

GLYPHOSATE SETTLEMENT

Agricultural crops genetically engineered to withstand glyphosate have greatly expanded the use of the chemistry since 1996. Glyphosate, the active ingredient in Roundup, also is used in forestry, urban, lawn and garden applications. Bayer also had glyphosate in its portfolio before acquiring Monsanto.

Bayer said the settlement includes about 95% of cases currently set for trial and "establish key values and parameters to guide the resolution of the remainder of the claims as negotiations advance."

The settlement also will include an allowance to cover unresolved claims, Bayer said, and "$1.25 billion to support a separate class agreement to address potential future litigation."

The agreement will be subject to approval by the U.S. District Court for the Northern District of California.

"First and foremost, the Roundup settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end," Bayer Chief Executive Officer Werner Baumann, said in a statement.

"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."

Bayer said that before deciding to settle, it considered the alternative course of continuing to litigate cases.

"In the company's risk assessment, potential negative outcomes of further litigation, including more advertising and growing numbers of plaintiffs, upwards of 20 trials per year and uncertain jury outcomes, and associated reputational and business impacts, likely would substantially exceed the settlement and related costs," the company said in the news release.

The settlement does not cover three California cases currently on appeal.

In May 2019, a California jury awarded $2.055 billion in damages to a couple that has battled cancer after decades of using the product. The couple, both in their 70s, were each diagnosed with the same type of non-Hodgkin lymphoma.

At the end of March 2019, a California jury awarded $80 million to a man with non-Hodgkin lymphoma who had used glyphosate at an animal refuge for nearly 30 years.

In 2018, another jury in the state awarded $289 million to a groundskeeper with cancer who used the chemical. The award was later reduced to $78 million.

Nathan Donley, a senior scientist at the Center for Biological Diversity, said in a statement to DTN that the settlement doesn't change the risks of glyphosate.

"Even Bayer's billions can't magically make glyphosate's well-documented links to cancer disappear," he said.

National Association of Wheat Growers President and Michigan farmer Dave Milligan said Bayer's settlement was important for farmers who rely on the product.

"Wheat growers work every day to produce a safe, affordable crop that balances crop rotation, input costs, production goals, and improvement of natural resources to protect the long-term sustainability of their farming operation," Milligan said in a statement.

"To achieve this goal, growers need all available tools at their disposal including glyphosate."

DICAMBA LITIGATION

The company also announced a settlement on litigation concerning its dicamba herbicide, XtendiMax, which is alleged to have caused damage to sensitive crops for several years now.

The company said it has agreed to pay up to $400 million to resolve multi-district litigation pending in the U.S. District Court for the Eastern District of Missouri, as well as on claims for the 2015-2020 crop years.

"Claimants will be required to provide proof of damage to crop yields and evidence that it was due to dicamba in order to collect," Bayer's press release stated. "The company expects a contribution from its co-defendant, BASF, towards this settlement." BASF owns and sells Engenia, another dicamba herbicide for use in dicamba-tolerant crops.

"Bayer stands strongly behind the safety and utility of its XtendiMax herbicide with VaporGrip technology and continues to enhance training and education efforts to help ensure growers use these products successfully," Bayer said in the news release.

The Bader Farm dicamba lawsuit, which ended in a jury ordering Bayer and BASF to pay $325 million to a peach farm injured by dicamba, is not included in this settlement. Bayer vowed to continue to fight that ruling in its press release.

The future use of dicamba herbicides over the top of dicamba-tolerant crops has been thrown into jeopardy recently, after a Ninth Circuit ruling vacating the registrations of three of four OTT dicamba herbicides, including XtendiMax. See more here: https://www.dtnpf.com/….

PCB SETTLEMENT

Bayer also announced a series of settlement agreements to resolve cases representing "most" of the company's exposure to PCB water litigation, the company said. Bayer will pay a total of about $650 million to the class.

Monsanto manufactured PCBs until 1977. One agreement establishes a class to include all local governments with EPA permits involving water discharges impaired by PCBs.

The company said it entered into separate agreements with the attorneys general in New Mexico, Washington, and the District of Columbia to resolve similar PCB claims, totaling around $170 million.

Bayer said it will finance all of these settlements via "existing surplus liquidity, future free cash flows, the proceeds from the Animal Health divestment, and additional bond issuances, which will provide flexibility in managing the settlement payments as well as upcoming debt maturities."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN


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