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Bayer Agrees To Pay Up To $10.9 Bln To Settle Roundup Lawsuits

Bayer (BAYZF.PK,BAYRY.PK,BYR.L) on Wednesday agreed to pay up to $10.9 billion to settle thousands of U.S. lawsuits alleging that the company's Roundup herbicide causes cancer. The company also resolves dicamba drift litigation for payment of up to $400 million and most PCB water litigation exposure for payment of about $820 million. The settlements contain no admission of liability or wrongdoing.

The company expects to start cash payments related to the settlements this year. It now assumes that the potential cash outflow will not exceed $5 billion in 2020 and $5 billion in 2021. The remaining balance would be paid in 2022 or thereafter.

In order to finance the settlements, Bayer said it could make use of existing surplus liquidity, future free cash flows, the proceeds from the Animal Health divestment, and additional bond issuances, which will provide flexibility in managing the settlement payments as well as upcoming debt maturities.

Bayer inherited thousands of lawsuits against Roundup inventor Monsanto Co. when it acquired the U.S. agriculture giant for $63 billion in 2018.

The company said it will make a payment of $8.8 billion to $9.6 billion to resolve the current Roundup litigation, including an allowance expected to cover unresolved claims, and $1.25 billion to support a separate class agreement to address potential future litigation.

Bayer also agreed to settle the dicamba drift litigation involving alleged damage to crops. The company will pay up to a total of $400 million to resolve the multi-district litigation pending in the U.S. District Court for the Eastern District of Missouri and claims for the 2015-2020 crop years.

The only dicamba drift case to go to trial - Bader Farms - is not included in this resolution.

Dicamba is a broad-spectrum herbicide first registered in 1967. Brand names for formulations of this herbicide include Dianat, Banvel, Diablo, Oracle and Vanquish.

Around 2016, dicamba's use came under significant scrutiny due to its tendency to spread from treated fields into neighboring fields, causing damage.

Meanwhile, Bayer today announced agreements that resolve cases representing most of the company's exposure to PCB water litigation. One agreement establishes a class that includes all local governments with EPA permits involving water discharges impaired by PCBs. Bayer will pay a total of approximately $650 million to the class, which will be subject to court approval.

The company also has entered into separate agreements with the Attorneys-General of New Mexico, Washington, and the District of Columbia to resolve similar PCB claims. For the agreements, which are separate from the class, Bayer will make payments that together total approximately $170 million.

In 2016, Washington was the first state to file a lawsuit against Monsanto over its PCBs, asserting that the company produced PCBs for decades while hiding what they knew about the toxic chemicals' harm to human health and the environment. Monsanto was the only U.S. company to produce polychlorinated biphenyls or PCBs from 1935 until it was banned in 1977.

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