Bayer May Issue New Stock to Fund Roundup Settlements

Bayer May Issue New Stock to Fund Roundup Settlements

Introduction

Bayer has announced plans to issue new shares to finance legal settlements and ongoing litigation costs related to Roundup.
The company is also contemplating withdrawing its glyphosate-based weedkiller from the U.S. market in an effort to stem the continuous wave of lawsuits.

Roundup’s Controversial History

Roundup has been widely used in agriculture and residential settings for decades, with glyphosate as its primary active ingredient. While marketed as safe for humans, recent research has linked glyphosate exposure to an increased risk of non-Hodgkin’s lymphoma and other health issues.

Legal Battles Over Cancer Risks

Bayer and its Monsanto subsidiary have faced over 120,000 Roundup lawsuits, with plaintiffs alleging that exposure to the herbicide caused non-Hodgkin’s lymphoma. The litigation began in 2015 when the World Health Organization’s International Agency for Research on Cancer (IARC) classified glyphosate as a probable carcinogen.

Massive Legal Costs and Reformulation Efforts

To address legal challenges, Bayer has already spent over $10 billion on Roundup settlements. In 2021, the company announced it would reformulate the weedkiller by removing glyphosate from consumer products. However, many lawsuits remain unresolved, and new claims continue to emerge as former users are diagnosed with cancer.

Bayer Seeks Shareholder Approval for New Stock Issuance

Last week, Bayer revealed plans to seek shareholder approval to issue new shares, representing nearly 35% of its outstanding stock. The company aims to raise funds over the next three years to cover settlement payouts and legal expenses. Following the announcement, Bayer’s stock value dropped by approximately 10%, according to market analysts.

Possible Exit from the U.S. Market

Bayer officials have informed U.S. lawmakers that the company may pull Roundup from the U.S. market if it does not receive legal protections from ongoing lawsuits. The company has made multiple legal attempts to dismiss claims, arguing that federal preemption laws should exempt it from liability. However, courts have consistently rejected this argument, allowing lawsuits to proceed.

Recent Legal Setbacks for Bayer

Bayer’s preemption argument was most recently dismissed by the Missouri Court of Appeals for the Eastern District. The court upheld a $1.25 million verdict awarded to a plaintiff in October 2023. This ruling adds to a series of legal defeats for Bayer as it struggles to curb litigation.

Financial Impact and Future Outlook

Bayer’s announcements followed the release of its fourth-quarter financial report for 2024. The company disclosed that Roundup generated $2.8 billion in U.S. revenue last year. However, with mounting legal costs and increasing pressure from regulators and plaintiffs, Bayer is now considering abandoning the U.S. market entirely if it cannot secure legal protections.