Bayer AG Chief Executive Officer Werner Baumann said the company is “fully committed” to integrating recent acquisition Monsanto Co. despite a $289 million jury award and rising wave of lawsuits seeking to link its weed-killer Roundup with cancer.
There is “an awful lot of excitement and enthusiasm” at Bayer about the $66 billion Monsanto purchase, Baumann said on a conference call Thursday. He reiterated that the company believes the jury decision is “wrong” and “inconsistent with the robust science-based conclusions of regulators and health authorities worldwide.”
“Nothing has changed concerning our strategy, attractive synergy potential and longer-term growth and margin expectations for our combined crop-science business,” Baumann said. “We are very optimistic.”
Some 8,000 lawsuits had been filed over glyphosate, the main ingredient in Roundup, as of the end of July, Bayer said on Thursday. That compares to the 5,200 complaints previously disclosed, and the number will almost certainly keep climbing after the Aug. 10 ruling in California.
$5 billion risk
Bayer has said it will appeal the $289 million decision in favor of a school groundskeeper who argued that exposure to Roundup caused his non-Hodgkin’s lymphoma. U.S. jury awards against companies are often overturned or reduced. Even so, the German company could still face as much as $5 billion in costs linked to glyphosate cases, analysts at Sanford C. Bernstein & Co. estimate.
The California verdict shocked observers both inside and outside Bayer, erasing $16 billion from the company’s market value in a week. On Thursday, the stock fell as much as 1.9 percent and was down 1.6 percent at 82.14 euros at 4:17 p.m. in Frankfurt trading.
Baumann said on the conference call that he is confident Bayer’s legal resources will help it defend glyphosate and that any appeal in the Roundup case will likely take “a year or longer.” The company isn’t earmarking any funds to settle Roundup cases. When asked about how much money it’s setting aside to defend the herbicide in court, Bayer deferred to Sept. 5, when the company reports second-quarter earnings.
“We want to make sure that glyphosate will continue to be available to our key stakeholders as an excellent, safe and very important tool for modern agriculture,” Baumann said.
Thus far the legal travails haven’t dimmed demand for the herbicide, said Liam Condon, head of Bayer’s agriculture unit, adding that the jury award has no bearing on regulators’ decisions about the product.
“Demand for glyphosate depends on the growing conditions, and not a jury decision in California,” Condon said.