Bayer AG stock was up sharply last week, amid speculation that the German company is moving closer to a settlement that would resolve thousands of Monsanto Roundup lawsuits pending in courts throughout the United States.
The massive litigation has grown to include over 13,000 claims that blame Monsanto’ glyphosate-based weed killers for causing non-Hodgkin’s lymphoma and other cancers. The matter became Bayer’s problem last June, after it paid $63 billion to acquire the Missouri-based agribusiness.
Three Monsanto Roundup lawsuits have since gone to trial. Bayer has yet to win a single case, with every jury finding that glyphosate was a significant factor in the plaintiffs’ cancer. So far, verdicts have ranged from $78 billion to over $2 billion.
The stunning trial losses and other fallout related to the Monsanto purchase caused Bayer’s stock price to tumble more than 40% over the past year, inspiring an investor revolt at the company’s most recent annual shareholder meeting.
Last Wednesday, Bayer announced it had taken several new steps to address the damaging litigation, including the establishment of a new Supervisory Board committee to “intensively monitor” the Monsanto Roundup lawsuits and make recommendations on strategy. An equal number of employee and shareholder representatives will serve on the committee, along with eight Supervisory Board members who have “extensive experience with complex litigations.”
Bayer also hired attorney John H. Beisner to advise the Supervisory Board on matters related to the Roundup lawsuits, including a recently-launched mediation effort. But perhaps most notably, Bayer praised Kenneth Feinberg’s court-ordered appointment as mediator.
‘Ken Feinberg has an excellent reputation and an outstanding track record as mediator in some of the most complex settlements in recent years,” said Supervisor Board Chairman, Werner Wenning “Working with him will ensure a professional and thoughtful approach in the upcoming discussions.”
Previous Feinberg-led negotiations resulted in the GM ignition switch settlement, the 9/11 Victims Compensation Fund, and Deepwater Horizon oil spill settlement.
In a clear sign of investor approval, Bayer’s shares rose more than 8% last Thursday. Marks Manns, a fund manager at Union Investment, one of Bayer’s largest German shareholders, told Reuters that the boost likely reflected anticipation of an earlier Round lawsuit settlement.
Bayer also won praise from Elliott Management Corp., which disclosed late Wednesday that it had acquired a $1.3 billion stake in the company. Considered an activist investor, Elliott suggested a Monsanto Roundup settlement was one of several actions Bayer could take to unlock an estimated 30 billion euros (more than $26 billion) in shareholder value.