Never bet against America’s litigation culture

Never bet against America’s litigation culture. Bayer has learnt that lesson the hard way. The German conglomerate on Wednesday agreed to pay up to $10.9 billion to end tens of thousands of lawsuits alleging its Roundup weedkiller caused cancer. The settlement goes some way towards drawing a line under the legal woes Bayer inherited when it acquired US seeds giant Monsanto back in 2018. But providing more clarity on its final liabilities opens a new can of worms. Namely, it may spur calls for Bayer to break itself up into separate healthcare and agriculture businesses. European industrial companies have been besieged by activists demanding splits. Bayer’s first mistake was buying and overpaying for Monsanto… Bayer’s second mistake was not settling sooner… The good news is that Bayer can easily afford to pay. It agreed to sell its animal health unit to Elanco last year for $7.6 billion and generated over €4.2 billion in free cash flow in 2019. The bad news is the company is highly indebted and will remain stretched for the foreseeable future. Net debt stands at €35.4 billion, up from €3.6 billion in 2017 following the Monsanto acquisition… At around €72 billion, Bayer’s market value is just half of where it was in 2015…  Bayer is best known for inventing aspirins. It will need a few bottles of the stuff to get it through the next few years.