Bayer volunteered for quite a headache with its 2018 pickup of Monsanto and weedkiller Roundup, what with lawsuits piling up and investors chomping at the bit. Now, it’s looking to relieve the pain of that multibillion-dollar legal overhang with an enormous deal to escape the Roundup litigation.
Bayer will dole out between $10.1 billion and $10.9 billion—the single largest settlement in pharma history—to put an end to thousands of lawsuits tied to its acquisition of Monsanto and glyphosate-based Roundup.
As part of its agreement, Bayer will pay between $8.8 billion and $9.1 billion to settle roughly 125,000 Roundup lawsuits combined in a California multi-district litigation and multiple state bellwether trials, Bayer said. The deal will settle roughly 75% of all Roundup suits and includes an allowance to pay out claims that have not been resolved.
Bayer will also set aside $1.25 billion to cover any future Roundup claims, which will be handled as part of a class negotiation. Bayer will not admit any wrongdoing as part of its settlement deal.
For Bayer, finally putting away its Roundup overhang could settle investor angst—and end the repeated calls for CEO Warner Baumann’s job. The Monsanto acquisition was blasted by shareholders who saw the buyout as pulling away from Bayer’s lucrative pharma R&D division, a sentiment that sent the company’s stocks plummeting soon after.
“First and foremost, the Roundup settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end,” Baumann said in a statement. “It resolves most current claims and puts in place a clear mechanism to manage risks of potential future litigation.”
The massive deal doesn’t come as a huge surprise after Bloomberg reported a rough sketch of the settlement and the $10 billion total back in May.
In April, Baumann won an overwhelming vote of confidence from Bayer’s shareholders at the German drugmaker’s annual meeting following multiple rounds of calls for a shakeup at the top.
Ahead of the meeting, top proxy adviser Institutional Shareholder Services recommended a “for” vote after agreeing that Bayer management had fulfilled its fiduciary duties and acted diligently in deciding to buy Monsanto. Rival adviser Glass Lewis asked shareholders to abstain on the vote.
The largely symbolic show of support came one year after investors gave a vote of no-confidence in Bayer’s leadership, signaling a short leash for Baumann, who helped spearhead the Monsanto acquisition in 2018 with the help of ex-Chairman Werner Wenning.
Wenning officially stepped down at the annual meeting after 54 years with the company, handing the top board position to Norbert Winkeljohann two years ahead of schedule.
If Bayer’s cash settlement nears $11 billion, it would be the single largest settlement on record for a drugmaker—narrowly edging out the $10 billion deal Purdue signed late last year to end its opioid lawsuits.
However, Bayer’s place at the top of that ignominious list could be short-lived as Israeli drugmaker Teva negotiates its own opioid settlement that could top $23 billion in value––although most of that will be tied to free drug donations.
Teva and a range of generic drugmakers could also soon negotiate another massive settlement in a federal price-fixing probe that has snared some of the industry’s biggest players.
In June, 51 states and territories claimed 26 generics companies and 10 individuals worked together to fix prices on at least 80 dermatological medicines. The defendants include some of the biggest names in the generics business, including Novartis’ Sandoz unit, Teva, Mylan and Pfizer.
The states allege company executives used phone conversations, text message, emails, conventions and dinner parties to “fix prices and restrain competition as though it were a standard course of business,” Connecticut’s attorney general William Tong said in a statement.
Jun 24, 2020