Shares of Bayer AG (BAYRY, Financial) nosedived about 7% on Wednesday, marking the company's sharpest decline since March, following the Washington Supreme Court announcement that claims linked to PCB exposure from the company's Monsanto unit were being reviewed. The case revolves around allegations that Monsanto's products have caused harm at the Sky Valley Education Center in Washington state, spotlighting ongoing legal battles involving the German life sciences giant.
The controversy began with Monsanto's polychlorinated biphenyls (PCBs), industrial chemicals that were phased out in 1977. Despite their discontinuation, the legacy of these compounds continues to impact Bayer after its acquisition of the U.S. agricultural company in 2018. The stock, which has already fallen 13% year-to-date, extending last year's 30% decline, is under pressure as investors react to the potential legal consequences.
Previously, an appeals court had overturned a $185 million award due to procedural errors, yet the high court's decision to revisit the case suggests a protracted legal journey ahead. Bayer remains steadfast, stating there is "no basis for a different outcome on appeal," and maintains that the previous decision to overturn was justified due to a lack of scientific validity in the plaintiff's testimonies.
This case is part of a broader series of litigations Bayer faces over alleged health hazards from Monsanto products, including the widely used herbicide Roundup. These legal challenges continue to shape Bayer's financial outlook, notably after settling over half of approximately 125,000 U.S. claims for $10.9 billion in 2020.
Despite recent legal victories, including the favorable ruling from the 3rd U.S. Circuit Court of Appeals on Roundup's labeling, the ongoing PCB case and its outlook for causing problems for Bayer's financial health remain a significant concern for investors and market analysts.
