Bayer Aktiengesellschaft (PK) (USOTC:BAYRY)
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2 Months : From Dec 2019 to Feb 2020
By Laura Kusisto and Ruth Bender
ST. LOUIS -- The latest trial over allegations that Bayer AG's popular Roundup weedkiller causes cancer was postponed indefinitely at the last minute on Friday to allow room for escalating settlement talks to continue.
Bayer was hours away from facing another jury on the issue, after the German chemical and drug conglomerate over the last year and a half lost the first three Roundup trials for a total of $190.5 million in awards. A fourth adverse verdict could have handed plaintiffs, who number more than 42,000, additional ammunition in settlement talks that have dragged on for months.
Analysts estimate any settlement would be in the $8 billion to $12 billion range, in talks led by court-appointed mediator Ken Feinberg, who said he was "cautiously optimistic" a deal could be struck in the coming weeks.
A Friday order from Judge Elizabeth Hogan said simply "cause (sic) continued" in handwritten message with no date to resume. Bayer said in a statement the case was delayed "to provide room for the parties to continue the mediation process in good faith...and avoid the distractions that can arise from trials."
The company added, "There is no comprehensive agreement at this time. There also is no certainty or timetable for a comprehensive resolution."
Bayer and a host of plaintiffs have moved closer in recent weeks to settling the Roundup litigation, according to attorneys and Mr. Feinberg.
In talks, Bayer and plaintiff lawyers are trying to establish the conditions for compensating plaintiffs as a step toward coming up with a total amount for a potential settlement, according to people familiar with the settlement negotiations. Bayer wants a deal that would include a way to handle potential future claims. How that can be done is still uncertain, though lawyers expect the company to set aside a pool of money to address future claimants.
The court cases have put pressure on Bayer Chief Executive Werner Baumann, who lost a standard-procedure, nonbinding confidence vote at last year's shareholder meeting, a first in postwar Germany. Investors blame Mr. Baumann for getting Bayer into the legal dispute as he was the main architect of the Monsanto deal.
The German company's $63 billion purchase of Monsanto in 2018 exposed it to the thousands of U.S. lawsuits arguing the Monsanto-developed Roundup weedkiller causes cancer.
"Bayer wants to be out of the headlines," said Tom Claps, an analyst at Susquehanna Financial Group. "They don't want to have to spend the next seven weeks in St. Louis while they're trying to negotiate a very big settlement to resolve everything."
The trial's postponement puts off a high-stakes test of Bayer's defense in Missouri Circuit Court in St. Louis.
The city is the home turf of Monsanto, which was founded there over a century ago. But St. Louis is also a favored destination of plaintiffs' attorneys taking on big companies, who prize local judges' leniency on letting in expert testimony, their willingness to group multiple plaintiffs in the same trial and the size of verdicts juries award.
Tiger Joyce, president of the American Tort Reform Association, called St. Louis one of "the places that the plaintiffs lawyers choose to go, where they want to. They're looking for the big awards, the big numbers."
Another loss in court would risk sparking new anger among Bayer shareholders. Investors said they want Bayer to deliver some progress on resolving the legal dispute before Bayer's next shareholder meeting on April 28 -- either in the form of a settlement or partial settlement or a win in court or on appeal.
Still, plaintiffs attorneys also took a risk taking the case to trial because a loss could diminish their hand in negotiations.
"The stakes are really high going into [the trial] in St. Louis," said Majed Nachawati, a Dallas-based attorney representing some 4,000 claimants. Mr. Nachawati isn't involved in the St. Louis trial. If Bayer wins, he said, "that would put downward pressure on what is a fair settlement."
Beyond the St. Louis case, two other trials are also slated to move ahead in California in the next month.
In 2015, an arm of the World Health Organization pegged Roundup's main chemical agreement as a probable carcinogen. Bayer disputes that finding, and the company is appealing all of the first three jury verdicts.
Bayer's share price has recovered some 40% since hitting a low of EUR52 ($57.49) at the peak of the crisis last June as investors grew confident that the company would soon reach a settlement.
Bayer securities traded on U.S. exchanges moved slightly higher on the trial delay, but settled 3.7% lower Friday.
Jacob Bunge contributed to this article.
Write to Laura Kusisto at email@example.com and Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
January 24, 2020 17:13 ET (22:13 GMT)
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