Bayer’s $7 Billion Offer to Resolve Roundup Woes Faces Doubts

Bayer's Legal Strategy for Roundup Faces Investor Doubts

Photographer: Alex Kraus/Bloomberg

Bayer AG CEO Bill Anderson is working to resolve the company's ongoing legal troubles related to its Roundup weedkiller, but his latest approach is being met with caution from both investors and legal analysts.

The German multinational initially lifted hopes by proposing a $7.25 billion class-action settlement, aiming to address the majority of current and future lawsuits alleging that Roundup causes cancer—a claim Bayer continues to dispute, but which has shadowed the company since acquiring Monsanto for $63 billion in 2018.

However, after an initial surge in Bayer’s stock price, investor enthusiasm quickly faded. Shares, which had jumped 7.4% on Tuesday, tumbled by as much as 12% the following day, marking their sharpest decline in over a year.

“This isn’t the breakthrough many investors were hoping for,” commented Markus Manns, a portfolio manager at Union Investment in Frankfurt, which holds Bayer shares.

Major Obstacles Remain

The proposed settlement still faces significant challenges. It requires approval from a Missouri judge, and class members have the option to opt out. Bayer can also withdraw from the agreement if participation is insufficient. Anderson has emphasized that nearly full participation is necessary for the plan to succeed.

The financial implications are substantial. Bayer has increased its litigation reserves to €11.8 billion ($13.9 billion) and warned that free cash flow could turn negative in 2026 due to large upfront payments. The company has arranged an $8 billion bridge loan to cover these costs and intends to refinance through bond and hybrid security offerings.

Despite skepticism about the Missouri class-action’s prospects, attorneys involved in structuring the settlement remain optimistic that Judge Tim Boyer, who has presided over several Roundup cases, will ultimately approve it.

“It won’t be easy,” said Eric Holland, a St. Louis attorney representing Roundup plaintiffs. “Class actions are always complex, but we believe we’ve addressed the key issues to secure approval.”

Supreme Court Review Adds Uncertainty

Bayer’s negotiating position has been strengthened by the U.S. Supreme Court’s decision to review a $1.25 million Roundup verdict from Boyer’s court, according to Georgetown law professor Maria Glover, an expert in mass torts and product liability.

The Supreme Court will determine whether federal law preempts failure-to-warn claims like those central to the Missouri litigation, which could impact future Roundup lawsuits.

“The Supreme Court’s pending decision on the failure-to-warn issue gives Bayer significant leverage,” Glover noted.

Glover suggested that Roundup claimants might want to consider settling now if they fear their claims could lose value should the Supreme Court rule in Bayer’s favor. However, she also pointed out that the Court has previously imposed strict limits on class actions intended to resolve future claims.

High Stakes for Bayer’s CEO

Anderson, who became Bayer’s CEO in mid-2023, has made resolving the costly litigation—already exceeding $10 billion—a top priority. He aims to largely contain the issue by the end of 2026 and believes the timing is now right for a class-action solution, following months of tough negotiations with plaintiff attorneys.

“This move is about freeing Bayer from litigation so we can focus on advancing cell and gene therapies, developing drought-resistant seeds, and improving everyday health solutions,” Anderson told investors.

His approach mirrors that of former CEO Werner Baumann, who in 2020 announced a broad settlement plan that was ultimately rejected by a federal judge, leaving the door open for continued lawsuits and costly verdicts.

“Proposing a settlement is one thing; actually finalizing it is another, even if this proposal appears well-constructed,” said Berenberg analyst Sebastian Bray. “Investors are also weighing the potential for higher interest expenses from the debt needed to fund the settlement.”

Learning from Past Setbacks

Bayer’s previous attempt at a class-action settlement was blocked in 2021 by U.S. District Judge Vince Chhabria, who cited major flaws in the plan, including the lack of an opt-out option. This time, Bayer’s proposal includes a 21-year duration, a larger funding pool, and allows members to opt out. The class is also based on Missouri state law, rather than federal standards.

Compensation for individuals will depend on their Roundup usage, age at diagnosis of non-Hodgkin’s lymphoma, and the severity of their condition. According to a website set up by settlement supporters, those who have already filed lawsuits could receive over $160,000 each, while individuals with less severe forms of the disease might get $40,000.

Legal Experts Weigh In

Lou Mulligan, dean of the University of Missouri-Kansas City School of Law, noted that Missouri’s class-action laws are similar to federal rules, so Bayer must demonstrate that the settlement meets legal requirements to proceed as a class action.

“This could succeed,” Mulligan said. “They chose the right venue. St. Louis judges are knowledgeable about Roundup litigation and appear open to settlement efforts.”

Mulligan added that the Supreme Court is expected to rule on the failure-to-warn issue before Judge Boyer considers final approval of the class, but attorneys may encourage claimants to review their compensation offers and decide whether to opt out before that decision.

The Supreme Court agreed in January to consider whether federal pesticide law protects Bayer from state-level failure-to-warn claims—a legal argument that has led to significant damages against Bayer and Monsanto. Arguments are scheduled for April 27, with a ruling anticipated by mid-year.

If the Court sides with Bayer, a large portion of claims—estimated by JPMorgan analysts to represent about 80% of cases—could be dismissed. However, if the ruling goes against Bayer, the settlement may not be enough to prevent further litigation.

“Bayer is buying time, but without a favorable Supreme Court decision, more lawsuits could follow,” Manns warned.

Bayer’s Broader Turnaround

Beyond legal matters, Bayer has experienced a recovery under Anderson’s leadership, with its stock price doubling over the past year. The company has implemented significant cost-cutting measures and streamlined management.

The rebound is also tied to improved performance in Bayer’s pharmaceutical division. While facing generic competition for its top-selling blood thinner Xarelto, demand remains strong for kidney treatment Kerendia and cancer drug Nubeqa.

Bayer is also introducing new products, such as the menopause drug Lynkuet, and recently surprised the market with positive trial results for the stroke treatment Asundexian, previously considered unsuccessful.

Looking Ahead

When asked about the possibility of breaking up Bayer’s conglomerate structure—which includes crop science and consumer health divisions—Anderson said his current focus is on resolving litigation and making Bayer a more agile life sciences company. However, he did not rule out future changes to the group’s structure.

“We will address the question of structure in due course,” he said.

With reporting by Tim Loh.

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