stockmarket

Bayer can absorb Roundup costs of 5 billion euros, but not 20 billion – Moody's


© Reuters. FILE PHOTO: Logo of Bayer AG is pictured at the annual results news conference of the German drugmaker in Leverkusen

BERLIN (Reuters) – Bayer (DE:) could absorb litigation costs of up to 5 billion euros (£4.3 billion) to settle ongoing lawsuits linked to its Monsanto (NYSE:) weed-killer Roundup, credit rating agency Moody’s said on Tuesday.

But if payouts reach 20 billion euros – a possible scenario according to analysts – the German pharmaceuticals company is in danger of losing its “Baa1” investment rating.

Claimants say that their cancer was caused by glyphosate, an ingredient in Roundup, and are demanding million-dollar compensation payments from Bayer, although some researchers contest this finding.

The World Health Organization in 2015 classified glyphosate as “probably carcinogenic to humans”, but the U.S. Environmental Protection Agency in September 2017 concluded a decades-long assessment of glyphosate risks and found the chemical was not likely carcinogenic to humans.

In the United States alone there are 11,200 lawsuits pending against Monsanto, which Bayer bought last year for $63 billion, and litigation setbacks have sent Bayer shares plunging in recent months.

Moody’s said that settlements involving payments totalling 20 billion euros made from 2020 until 2022 would lead to a leverage ratio above Bayer’s current “Baa1” rating.

But if Bayer agreed to make the settlement payments by 2021 its leverage would increase to almost 4.0x which would even stretch even a hypothetical “Baa2” rating.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.