Bayer Seeks Capital Raise to Cover Roundup Lawsuit Settlements
Updated
Bayer continues to face struggles related to its acquisition of Monsanto and the flagship product Roundup, which currently has 67,000 pending cases alleging the herbicide has caused serious health conditions. So far, Bayer has paid out $10 billion to settle cases and has $5.9 billion set aside to resolve the pending cases. Sources told Reuters last week that Bayer has indicated the agrochemical company may discontinue sales of Roundup in the United States if legal protections aren’t put in place to protect the company from “failure-to-warn” lawsuits.
According to a Reuters report, Bayer is planning to ask shareholders for an equity capital raise of 35% of its outstanding shares over the next three years to pay for litigation and settlement fees from ongoing Roundup lawsuits. Since the 2018 $63 billion acquisition of Monsanto, Bayer’s stock value has declined by over 70%. The request will come at the next shareholder meeting in April, and the funds will only be used to pay for litigation and settlement costs.
Bayer earned $2.8 billion in revenue from Roundup sales last year and remains as the only domestic producer of glyphosate in the United States. Some farmers rely on imported generic glyphosate from China.
There are a number of industry-funded studies showing the safety of glyphosate along with the EPA’s analysis, but there have been allegations and evidence showing industry manipulation of studies dating back to the 1990s. The EPA states, “there are no risks of concern to human health when glyphosate is used in accordance with its current label.” That came from a 2020 “interim decision registration review decision (ID) for glyphosate.”
In 2022, the U.S. Court of Appeals for the Ninth Circuit vacated the human health portion of the report. The EPA is expected to complete a new registration review with more comprehensive details about glyphosate’s effect on human health in 2026.
In 2021, Bayer announced it would begin phasing out the use of glyphosate in Roundup for residential applications in 2023. The company said it is making this move to manage litigation expenses rather than concerns about health.
In October, The HighWire reported about a report from Friends of the Earth that found the new residential formula for Roundup is 45 times more toxic for human health than glyphosate. The report stated that the new chemical in Roundup, Diquat Dibromide, is “twenty-seven times more acutely toxic and two hundred times more chronically toxic to humans than glyphosate.” The authors of the report say “The U.S. Food and Drug Administration does not allow Bayer or other drug companies to replace the aspirin in a brand-name pain reliever with oxycontin or fentanyl, and for good reason.”
A report from the Guardian in December said that the U.K. has exported 10 pesticides that contain chemicals banned in the U.K., including Diquat Dibromide. The report includes comments from a Brazilian tobacco farmer who experienced paralysis on the right side of his body after using Reglone, of which Diquat Dibromide is the primary active ingredient. The farmer reportedly used the product just one time.
The glyphosate debate has continued across country lines despite U.S. health agencies claiming the ingredient is safe if used in accordance with the product label. Mexico has been involved in a trade dispute with the United States regarding GMO corn imports. A panel of arbitrators for the U.S. Mexico Canada Agreement (USMCA) ruled in favor of the U.S. on Dec. 20 and this requires Mexico to accept genetically-modified corn for use in tortillas.
U.S. Right to Know reported that the panel ignored the hundreds of peer reviewed studies provided by Mexico that indicate harms associated with genetically-modified crops and glyphosate. The panel consists of just three members, including Jean Engelmayer Kalicki, a partner at Arnold & Porter LLP, which has represented Bayer, Pfizer, and other large corporations in court.
The chair of the panel, Christian Häberli, who has worked with the World Trade Institute (WTI) and World Trade Organization (WTO). He has advocated for food security measures that will work as the climate continues to change. Bayer’s website states, “As climate change impacts corn production, hybrid seed technology could help improve yields and combat food insecurity around the world.”
This week, Mexico enshrined a ban on GMO corn into the constitution to protect thousands of heirloom corn varieties of which the country says is “central to culture and national identity.” President Claudia Sheinbaum’s predecessor, Andres Manuel Lopez Obrador, signed a decree in 2020 calling for agencies to gradually substitute alternatives to glyphosate in agricultural production.
Bayer is going to unseal some documents related to “public relations” according to attorney Matt Clement who is trying a case against Bayer in Cole County Missouri. Clement wrote in his motion, “Cole County has been especially inundated with Monsanto’s propaganda” as he asked for sealed documents to be released as it may be impacting the jury pool.
Some of the ads are coming from the Modern Ag Alliance and the Protect America Initiative. Jess Christiansen, a spokesperson for Bayer Crop Science, said the ads are intended to educate the public, not persuade the jury pool.
On March 4, a fire occurred at the private residence of an unnamed Bayer executive. Eight different agencies are investigating the incident as suspected arson. There were no injuries and the “the structure sustained no significant damage” according to the Morris County Prosecutor’s Office in New Jersey.