Bayer Shares Soar After Roundup Weedkiller Legal Victory In Philadelphia Court

Shares of Bayer AG have been pressured over the years after a tidal wave of litigation over its Roundup weedkiller. The company settled much of the Roundup litigation but still faces tens of thousands of lawsuits. 

Bloomberg reported on Thursday that the 3rd US Circuit Court of Appeals in Philadelphia ruled in favor of Bayer’s Monsanto, shielding the German company from a lawsuit brought by a Pennsylvania groundskeeper. This decision could open the door for a crucial review by the US Supreme Court, potentially paving the way to finally resolve the ongoing litigation nightmare.

Chief Judge Michael Chagares, writing for a unanimous three-judge panel, stated that the Federal Insecticide, Fungicide, and Rodenticide Act mandates nationwide uniformity in pesticide warning labels, blocking any attempt from Pennsylvania to add the warning label to the Roundup weedkiller bottle. 

Bayer pointed out that the decision conflicts with rulings from federal appeals courts in Atlanta and San Francisco. This ruling sets the stage for the case to be reviewed by the US Supreme Court. 

A Bayer spokesman told Bloomberg via an emailed statement that the ruling “creates a split among the federal appellate courts and necessitates a review by the US Supreme Court.” 

Years of litigation have weighed on shares of Bayer trading in Germany, which have been down nearly 80% since peaking at around $120 in 2017. Shares are up 10% to end the week at around the 29 euro handle. 

“On the single stock level, Bayer’s shares are rallying after the company won an appeal in Roundup litigation, driving the Pharma space higher (GSXEPHAR +1.15%),” Goldman’s Ananya Prakash wrote in a note this AM. 

Bloomberg, citing a note from Holly Froum, an analyst at Bloomberg Intelligence, highlights what might be next for Bayer…

The next step could entail a more comprehensive review from the Philadelphia appeals court, which may take months and could push back trials scheduled in Pennsylvania, Holly Froum, an analyst at Bloomberg Intelligence, said in a note. That could reduce Bayer’s ultimate exposure in the overall litigation, potentially keeping settlement costs within the company’s $16 billion outlay, Froum said.

So far, Bayer has settled most of Roundup litigation for $10.9 billion but faces almost 58,000 claims. Another 114,000 claims have been settled or deemed ineligible.