Frankfurt (Reuters) - A record fine for Bayer in the glyphosate litigation in the United States has spooked investors in the agricultural and pharmaceutical company.

Shares fell by more than five percent to 30.48 euros in early trading on Monday, their lowest level for almost two months.

The shares were by far the biggest losers in the leading Dax index. Bayer suffered another defeat in the glyphosate trials on Friday. A jury in Philadelphia ordered the company to pay 2.25 billion dollars to a man who attributed his cancer to Bayer's Roundup weedkiller containing glyphosate. This is the highest fine ever imposed on the company. However, the amount is likely to be significantly reduced in the appeal proceedings.

After a lengthy series of successes in the wave of lawsuits - which the company brought in-house with the takeover of glyphosate developer Monsanto - Bayer lost five lawsuits in a row at the end of last year and won one lawsuit in December. In total, the company has won ten out of 16 lawsuits. Bayer's most expensive verdict to date was in 2019 in the case of the Pilliod couple, who were awarded two billion dollars by a jury - but the penalty was reduced to 86.7 million by a judge.

According to fund manager Markus Manns from Union Investment, Bayer simply cannot get to grips with the glyphosate case: "It looks like the whole thing is starting all over again. The newspaper advertisements with which US lawyers are looking for potential glyphosate victims have risen massively and will be given a further boost by the successful lawsuit," he told the Reuters news agency. The options are limited: Bayer could either agree to a new settlement or selectively negotiate cases with a good chance of success for the company. "Unfortunately, a new settlement would not put an end to the glyphosate case, as new plaintiffs would be knocking on Bayer's door again in one to two years. And Bayer lacks the money for recurring settlements worth billions every three to five years."

The latest verdict by the jury in Philadelphia provides for a compensatory payment of 250 million dollars and punitive damages of two billion dollars - this is also likely to be reduced on appeal, as it exceeds the requirements of the US Supreme Court. Bayer also emphasized that the total amount of damages in previously lost lawsuits had been reduced by more than 90 percent. However, the ruling is likely to cause additional headaches for CEO Bill Anderson. He has announced a significant reduction in personnel at Bayer and intends to cut several management levels and simplify coordination processes. The Group structure is also under scrutiny, as demanded by investors, but a split-up of Bayer is not expected for the time being, as Reuters has learned from insiders.

In 2020, Bayer settled a large part of the Roundup lawsuit pending at the time for a payment of up to 9.6 billion dollars, but did not receive court approval for an agreement to prevent future lawsuits. Most recently, settlements were still pending for 52,000 of the approximately 165,000 claims filed. At the end of 2022, provisions for settlements of existing and future glyphosate lawsuits still amounted to 6.4 billion dollars.

In order to fend off further future lawsuits, Bayer stopped selling products containing glyphosate to US private customers in 2023 - they made up the vast majority of plaintiffs. Chief Financial Officer Wolfgang Nickl said in November that the company was not planning to change its litigation strategy despite the recent defeats. "We have no desire to write huge checks to settle glyphosate lawsuits when we have little free cash flow." Bayer has always denied the allegations against glyphosate. Authorities worldwide have classified the product as non-carcinogenic. The World Health Organization's cancer research agency IARC rated the active ingredient as "probably carcinogenic" in 2015. "We will continue to fight lawsuits in court, as it has been shown that we win lawsuits when plaintiffs' attorneys cannot misrepresent the scientific and regulatory assessments," Bayer said.

(Report by Patricia Weiß; edited by Sabine Wollrab. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)