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Bayer Raises Cost of Fighting Future Roundup Suits to $2 Billion

(Bloomberg) – Bayer AG’s legal bills to contain the fallout over the weedkiller Roundup keep rising as the German company expects costs of handling future lawsuits to increase to $2 billion from $1.25 billion.

The drugs and chemicals maker is far enough along in talks with U.S. plaintiff attorneys to realize that the outlay will be higher than anticipated in June, it said in a statement Tuesday. Bayer also reported earnings and sales that missed estimates as the pandemic hurts demand for key agriculture and pharmaceutical products.

The Roundup litigation continues to vex Chief Executive Officer Werner Baumann, who orchestrated the $63 billion takeover of Monsanto in 2018. Bayer failed to settle outstanding Roundup suits by Monday, a deadline set by a judge who has said he’ll resume federal trials over claims the weedkiller caused consumers’ cancer.

Bayer also said it took non-cash impairment charges, including goodwill, of 9.3 billion euros ($10.9 billion) on intangible assets in the crop science unit. That’s at the higher end of the range Bayer flagged in September.

The shares traded as much as 2.2% lower early Tuesday in Frankfurt.

The company said Tuesday it has agreements that are completed, in the process of being finalized or that have been reached “in principle” for 88,500 claims — but that it can’t say with certainty that the total number of existing Roundup suits is 125,000 until the entire settlement process is complete.

Shares are down more than 58% since the Monsanto deal. The company lost three U.S. trials related to the product and watched as the ranks of plaintiffs filing charges multiplied. Bayer insists the product is safe and is appealing.

This year, the pandemic initially weighed on Bayer’s pharma division as people put off non-urgent surgeries and other health-care needs. But in the third quarter it became clear that the biggest impact from the crisis on Bayer might be to its crop-science division due to flagging demand for some farm commodities and biofuel.

The company posted adjusted third-quarter earnings of 1.8 billion euros before interest, taxes, depreciation and amortization. That missed the 2.06 billion euro average of analyst estimates. Sales also fell short of estimates.

Sales at crop science fell by 12%, accounting for much of Bayer’s quarterly miss, while pharma unit revenue dropped 1.8% and consumer health grew by 6.2%.

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