Bayer AG is blaming the spread of the coronavirus for slowing negotiations aimed at resolving lawsuits that claim its controversial Roundup weedkiller causes cancer and is asking consumers to settle for less, according to people familiar with the talks.
The German company recently backed out of tentative agreements to resolve the claims, said the people who asked not to be identified because the talks are private.
The move gives Bayer more time to assess the future impact of the pandemic on its business and may help it keep the total amount of Roundup settlements under $10 billion. Shareholders are pressuring management to resolve the litigation to lift the overhang on its shares.
Lagging revenues prompted company officials to ask consumers to take as much as 20% less in compensation than originally offered in the talks, the people said. That figure is going to be the focus of intense negotiations, they added.
Bayer officials confirmed Friday that requirements for people to practice social distancing to help slow the spread of the virus have gummed up the settlement process.
“COVID-19 dynamics, including restrictions imposed in recent weeks, have caused meeting cancellations and delayed this process,” Chris Loder, a U.S.-based Bayer spokesman, said in an emailed statement.
“We cannot speculate about potential outcomes from the negotiations or timing, given the uncertainties surrounding the pandemic and the confidentiality of this process, but we remain committed to engaging” in good-faith talks, Loder said.
The company is attempting to resolve more than 45,000 claims blaming exposure to glyphosate in Roundup — made by Bayer’s Monsanto Co. unit — for non-Hodgkin’s lymphoma in users of the product. The company denies glyphosate causes cancer.
But after losing three cancer trials in California that resulted in combined damages of $191 million, Bayer agreed to postpone the next round of Roundup trials to provide more time for negotiations. At least a half-dozen trials scheduled to start in the first quarter of this year have been put on hold. Bayer is appealing the verdicts.
Bayer shares fell under siege after the company acquired Monsanto in June 2018, losing as much as 47% of their value as trial losses mounted and new cases multiplied. The stock price began edging up again with the prospect of a settlement drawing closer.
Over the last four months, Bayer reached draft settlement agreements with law firms across the U.S. representing Roundup cancer patients, but the accords hadn’t been finalized, the people said.
Because Bayer officials planned to use some operating revenues to help fund the settlements, they came back to the negotiating tables to ask consumers to take less than was originally offered, the people said. Lawyers must now go back and persuade their clients to do that, the people added.
Tom Claps, a litigation analyst with Susquehanna Financial Group LLLP, said Friday that plaintiffs will likely accept lower compensation given the uncertainties created by the pandemic.
While it will be difficult to go back and ask for “massive discounts to the already agreed upon terms, Bayer has a strong argument that economic conditions have drastically changed requiring some discount,” Claps wrote in a note to clients.
Bayer isn’t adverse to settling Roundup claims. Last month, the company agreed to pay $39.5 million to settle a proposed class-action case alleging its Monsanto unit ran misleading ads about the controversial Roundup weedkiller and its potential health risks to humans and animals.
Under the deal, Roundup’s label won’t say glyphosate — the product’s active ingredient — only affects an enzyme found in plants. Consumers contend the chemical attacks an enzyme found in humans and some animals. The case didn’t raise cancer claims.
The case is In re: Roundup Products Liability Litigation, MDL 2741, U.S. District Court, Northern District of California (San Francisco).
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