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Bayer: 10 bn dollar 'friendly' settlement in US

( - Bayer announced last night that it has reached a series of out-of-court settlements totaling 10.
1 billion-to-10.9 billion dollars (i.e. between 9.1 billion-9.8 billion euros) to put an end to lawsuits relating to the most problematic activities of its US subsidiary Monsanto.

Most of this amount relates to litigation in the United States over the herbicide Roundup, of which 75% of the claims, or the equivalent of 125,000 cases, will be settled under the agreement.

To this end, Bayer is offering to pay between 8.8 billion and 9.6 billion dollars to settle the outstanding claims, with an additional 1.25 billion dollars to settle future litigation.

At the same time, the German group has agreed to pay 400 million dollars to settle claims relating to dicamba, another Monsanto weed killer, which has also been subject to legal proceedings in the US.

Finally, Bayer says that it has reached an agreement estimated at 820 million dollars to settle lawsuits relating to PCBs (polychlorinated biphenyls) that Monsanto produced up until 1977.

Bayer states that the payment of these amounts should start this year with payments of five billion dollars in 2020 and 2021 respectively, with the remaining funds to be released from 2022 onwards.

In a statement, the group explains that it intends to use its cash flow, as well as the funds from the sale of its animal health subsidiary, to pay for most of these settlements.

The Bayer share was up almost 1% on Thursday morning on the Frankfurt Stock Exchange after the agreement, which had been the subject of many rumours since the beginning of the week, was made official.

Invest Securities analysts said that these announcements improve the group' visibility, with an overall amount that is lower than what was initially anticipated.

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