Shares of German chemical and pharmaceutical chemical group Bayer AG suffered their worst loss in 16 years after a U.S. jury determined that its Roundup weed killer played a substantial role in causing cancer in a California man known as Edwin Hardeman. The shares fell more than 12% on Wednesday, wiping €8 billion ($9.1 billion) in value from the company following the ruling.
Shares of the German conglomerate were trading at €60.81 ($69.04) after shedding 12% of their value on the Frankfurt stock exchange. Fears that the verdict could be a bellwether of other lawsuits against Bayer AG and its U.S. subsidiary Monsanto, triggered the decline.
Bayer shares have been under pressure since the German chemical giant acquired Monsanto in a $63-billion deal last year. Nonetheless, the unanimous ruling by a San Francisco federal court was not a finding of chemical maker’s liability for the cancer of 70-year-old Hardeman. The same jury, however, is expected to decide liability and damages in a second trial phase.
Following the ruling, Bayer said that it is confident the evidence in phase two will show that “Monsanto’s conduct has been appropriate and the company should not be liable for Mr. Hardeman’s cancer.” On the other hand, Hardeman’s lawyers said they can now “focus on the evidence that Monsanto has not taken a responsible, objective approach to the safety of Roundup.”
If Bayer fails to convince the courts that Roundup is safe, investors are more likely to continue running away from the firm for fear that damages payouts quickly mount into billions. Gunther Zechmann, an analyst at Bernstein said, “This looks like 2-0 plaintiffs, and clearly not helpful for the overall payout calculus and resolution of the litigation.”
Last month, Bayer AG CEO Werner Baumann said the company faces a total of 11,200 cases in the U.S. over Roundup and its active ingredient glyphosate, which is made by Monsanto. Settlement options for over 700 lawsuits consolidated in San Francisco’s federal court are now likely to be determined by the case.
Shares in Bayer were dragged down last year after a U.S. judge upheld a California jury’s ruling that found the agrochemical company liable for causing cancer in a groundskeeper known as Dewayne Johnson. The jury ordered Monsanto to pay $289 million to the plaintiff who argued Roundup caused his terminal cancer. Nonetheless, the judge cut the damages to $78 million.