Verdict In Weed Killer Case Hits Bayer -- WSJ

Roundup maker Monsanto was acquired by the German firm in June

By Anthony Shevlin

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 (August 14, 2018).

Shares in Bayer AG fell sharply on Monday after Monsanto Co. -- which the German chemical company recently acquired -- was ordered to pay $289.2 million in a landmark lawsuit over whether exposure to two of its weed killers caused cancer.

The ruling by a California state jury on Friday found that Monsanto's Roundup and Ranger Pro products presented a "substantial danger" to consumers, and that the St. Louis-based company knew -- or should have known -- the potential risks they posed.

The case is the first of many that could go to trial and represents a nagging issue for Bayer, which closed its $60 billion-plus acquisition of Monsanto in June after two years of wrangling.

Monsanto said that as of February it had a recorded liability of $254 million relating to various product claims and that it is aware of 5,200 plaintiffs who claim to have been injured by exposure to glyphospate-based products. The company has previously said it couldn't estimate losses from the litigation.

Controversy has dogged the Roundup weed killer for years as studies have produced mixed results about the potential carcinogenic hazard of glyphosate, its active ingredient. However, Friday's ruling was a surprise to some because of existing U.S. regulations that allow the ingredient's use.

Bayer said Monday that the jury's verdict was "at odds with the weight of scientific evidence, decades of real world experience and the conclusions of regulators around the world." It also noted that the verdict remains subject to post-trial motions and an appeal.

A spokesman added that Bayer's involvement in the case and its ability to comment further are currently restricted by U.S. antitrust arrangements. The company declined to comment on any potential liabilities.

Bayer shares on Monday closed at a nearly 5-year low, falling 10% to EUR83.73 ($95.45).

Analysts at Barclays said the result was "likely to create a litigious headache for Bayer" and that the number of similar pending cases could multiply. However, they said it was unlikely they would all result in a similar financial award and that U.S. regulators could maintain their benign stance on the product, which first went on sale in 1974.

The next trial involving Roundup, also a state case, is scheduled to begin in October in St. Louis. Dates for lawsuits in federal courts have yet to be set.

The suit in California was brought by Dewayne "Lee" Johnson, who had worked as a groundskeeper for the Benicia Unified School District in the San Francisco Bay area and has been diagnosed with non-Hodgkin lymphoma.

Mr. Johnson's lawyers had argued Monsanto knew that testing of glysophate was insufficient, and that employees "ghostwrote" favorable scientific articles and paid outside scientists to publish the articles under their names.

Sales of Roundup make up the bulk of Monsanto's agricultural productivity division, which generated $3.7 billion in sales for the company's 2017 fiscal year -- about one-quarter of Monsanto's total. Glyphosate, the product's main chemical ingredient, has been off-patent for years, but Roundup underlies Monsanto's multibillion-dollar franchise in genetically engineered crops, including corn, soybean, cotton and canola varieties designed to survive the spray.

--Donato Paolo Mancini, Nathan Allen and Jacob Bunge contributed to this article.

(END) Dow Jones Newswires

August 14, 2018 02:47 ET (06:47 GMT)

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