There’s a $2.5 billion question hanging over Bayer AG. Or perhaps a $20 billion question, depending on who you ask.
As lawsuits mount claiming the embattled German company’s weedkiller Roundup causes cancer, analysts are scrambling to calculate the size of its potential settlement costs. The exercise requires a little math and a lot of reading tea leaves, which is why estimates range from manageable to colossal.
To add to the confusion over the settlement value, the stock market has given its own view of the cost of the Roundup debacle by pummeling Bayer’s shares: the company has lost about $38 billion in value since buying Monsanto. The shares were little changed [on July 11] in Frankfurt.
[Tom] Claps, a legal and regulatory analyst at Susquehanna in New York, says bloated settlement estimates are partly to blame for the stock’s collapse. He puts the settlement in a range of $2.5 billion to $4.5 billion.
It makes a massive difference whether Bayer starts winning any of the cases or the appeals process,” said David Evans, an analyst for Kepler Cheuvreux in London.
So Evans has come up with three different scenarios. If Bayer can win all its coming legal battles (a low probability, he notes) it could pay very little. If it keeps losing in court, a settlement may cost a whopping $20 billion. Evans’s middle scenario has Bayer paying about $5 billion.
Read full, original article: Bayer’s Roundup Misery Toll Depends on Who Runs the Numbers