Bayer Shares Jump as US Government Backs Bid to Limit Roundup Lawsuits

Support from the Trump administration boosts hopes for a Supreme Court review and a major shift in long-running glyphosate litigation

Bayer’s share price surged more than 12% in early European trading on Monday after the US government urged the Supreme Court to take up the company’s effort to restrict thousands of lawsuits linked to its Roundup weedkiller. The move marks a significant development in Bayer’s multi-year legal battle over glyphosate and could reshape the litigation landscape that has overshadowed the company since acquiring Monsanto in 2018.

US Government Supports Bayer’s Legal Argument

In a strongly worded legal brief, US Solicitor General D. John Sauer backed Bayer’s argument that federal law should pre-empt state-level failure-to-warn claims.

Key points include:

• Federal pesticide law, Sauer argued, blocks states from imposing additional warning labels that differ from those approved by the Environmental Protection Agency (EPA).
• The EPA has “repeatedly determined that glyphosate is not likely to be carcinogenic in humans” and has approved labels that do not include cancer warnings.
• Sauer emphasised that manufacturers should not face a patchwork of state-level requirements once federal standards are set.

This filing represents one of the strongest signals yet that Washington is prepared to support Bayer’s attempt to limit the scale of ongoing litigation.

Why Bayer Needs Supreme Court Intervention

Bayer is seeking to overturn a Missouri ruling that upheld a $1.25 million verdict awarded to John Durnell, who claims he developed non-Hodgkin’s lymphoma after long-term Roundup use.

The company currently faces:

• 67,000 active Roundup-related cases across the US
• Allegations that long-term exposure to glyphosate caused cancer
• Continuing legal pressure despite already paying $10 billion to settle earlier rounds of litigation

While many claimants argue Roundup caused serious health issues, Bayer maintains that decades of scientific research support the safety of glyphosate when used correctly.

Analysts Say Filing Significantly Boosts Bayer’s Chances

Market analysts welcomed the US government’s intervention:

Jefferies View

Analyst Chris Counihan described the filing as “a positive step forward” in Bayer’s four-pillar strategy to resolve glyphosate litigation by 2026.
He noted Bayer has set aside €6.5 billion to cover outstanding and future claims.

JPMorgan View

JPMorgan’s Richard Vosser went further, calling the development “an important step” toward securing a Supreme Court review this term.
He highlighted three critical points:

• 80% of existing cases hinge on the very pre-emption issue the Biden administration has now supported.
• A favourable Supreme Court decision in 2026 could dramatically reduce the scope and cost of litigation.
• He estimates Bayer’s provisions could fall by €5 billion, translating to a potential 15–20% uplift in the share price.

Why This Matters for Bayer’s Future

The long-running Roundup saga has been a major drag on Bayer’s valuation since its $63 billion takeover of Monsanto. The company has struggled to secure a comprehensive settlement covering both past and future cases, leaving litigation risks unresolved.
Fresh Supreme Court momentum could:

• reduce financial uncertainty
• limit future legal liabilities
• strengthen investor confidence
• free up capital for restructuring or strategic investment

What This Could Mean for Investors

For shareholders and potential investors, the latest development offers a clearer picture of Bayer’s risk profile:

Potential Upside

• A successful Supreme Court review could materially reduce legal provisions, improving balance-sheet strength.
• Lower litigation risk may lead to a re-rating of the stock, particularly after years of downward pressure.
• Analysts suggest a favourable ruling could unlock double-digit percentage gains for shareholders.

Remaining Risks

• The Supreme Court may still decline to hear the case.
• Even with pre-emption, individual claims or new lawsuits could continue.
• Litigation in other jurisdictions remains unresolved.

Conclusion

The US government’s intervention is a major milestone for Bayer — and one that markets have reacted to enthusiastically. While significant legal risks remain, the prospect of a Supreme Court review offers fresh optimism for investors who have long grappled with the uncertainty surrounding Roundup litigation.

Sources: (Investing.com, Fool.com)