Bayer Shares Resume Fall After Roundup Payout Tops $2 Billion
May 14 2019 - 6:24AM
Dow Jones News
By Ruth Bender
BERLIN--Bayer AG (BAYN.XE) 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 off 2.7% around midday--the worst performer in
the Frankfurt stock exchange's blue-chip DAX index--after hitting a
new seven-year low earlier following 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--up sharply from the two-digit million figures Bayer is
facing in the 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 Bayer plotted late last
year in an effort to convince increasingly skeptical investors that
it has its drugs-to-crops business under control.
In the absence of 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 struggle 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. Bayer 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, as is often
the case in such litigation.
Gunther Zechmann from Bernstein said he expected Monday's award,
which included $2 billion in punitive damages, to end up at $110
million.
Still, the eye-popping amount granted by the jury this week
could make the 13,400 total plaintiffs Bayer faces at its latest
count hesitant to settle "given the prize available through winning
their case," Mr. Zechmann said.
Some investors would like to see Bayer settle sooner rather than
later to reach more clarity over the future of the company.
Write to Ruth Bender at ruth.bender@wsj.com
(END) Dow Jones Newswires
May 14, 2019 06:09 ET (10:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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