Bayer announced a series of agreements that will substantially resolve major outstanding Monsanto litigation, including U.S. Roundup product liability litigation, dicamba drift litigation and PCB water litigation.
The massive legal settlements total up to $10.9 billion to compensate roughly 125,000 people who have claimed to be harmed by products of its recently acquired subsidiary, the Monsanto Company. The company also is resolving dicamba drift litigation with a payment of up to $400 million. In addition Bayer is addressing most PCB water litigation exposure with a payment of approximately $820 million.
The funding for all of the measures will be sourced from free cash flow and Animal Health divestment. Cash payments related to the settlements are expected to start in 2020. Bayer currently 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 these payments which are subject to tax treatment, Bayer can 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.… Continue readingRead More »