Bayer's share price plummeted by as much as 12% after a jury announced its verdict over Roundup weedkiller. The court found a link between the product and cancer. One of its customers, Edwin Hardeman, developed a form of cancer after using the brand's weedkiller in his yard and the court agreed.
As reported on The Wall Street Journal, the lawyers of the plaintiff said that their client developed non-Hodgkin lymphoma after using the Roundup herbicide for 26 years. Hardeman regularly used the weedkiller to poison oak and deal with the weeds. Roundup is one of Bayer's best-selling herbicide products but the US federal court in San Francisco determined that the glyphosate-based weedkiller greatly contributed in causing the plaintiff's cancer.
Immediately, after the German company lost in the first round of court battle and the verdict has been made public, banks began reducing Bayer AG's ratings and cutting price targets for its stock.
"We are disappointed with the jury's initial decision, but we continue to believe firmly that the science confirms that glyphosate-based herbicides do not cause cancer," Bayer stated via press release. "Bayer stands behind these products and will vigorously defend them."
The company added, "We are confident the evidence in phase two will show that Monsanto's conduct has been appropriate and that the company should not be liable for Mr. Hardeman's cancer."
According to Bloomberg, the settlement could reach more than $5 billion. Apart from the settlement for this case, Bayer also lost money after its shares dipped and this is said to be the company's worst decline since 2003.
Likewise, the recent decision is another blow to the German pharmaceuticals and chemicals company since in August 2018, the court penalized Bayer's Monsanto unit by ordering $289 million payouts. This stemmed from the fact the company failed to warn customers about Roundup and Ranger Pro's potential cancer risks. They filed an appeal and the payout was reduced to $78.5 million.
Bayer's stock dropped by a third in the past year and wiped out over $20 billion from its market value. The firm is facing more lawsuits from farmers, gardeners and landscapers. There are six more trials for this year and with these legal battles, it is feared that the company's stock price may hit rock bottom.
With regards to Bayer's ongoing trials and its effect on stock prices, analyst at Citigroup, Peter Verdult, stated via Financial Times, "While sentiment will clearly take a knock at the second Roundup trial going against Bayer, one has to keep in mind that both verdicts were delivered by juries in San Francisco-California and, by our calculation, that €22bn of litigation risk is already priced into the shares."
