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Capital Calls: Bayer’s weedkiller woes just won’t die

3 minute read

A woman uses a Monsanto's Roundup weedkiller spray without glyphosate in a garden in Ercuis near Paris, France, May 6, 2018.

LONDON, May 27 (Reuters Breakingviews) - Concise insights on global finance.

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HARD TO KILL. If only Bayer’s (BAYGn.DE) lawyers were as successful in tackling unwanted problems as its Roundup weedkiller. Shares in the 51 billion euro German group fell 5% on Thursday read more after a U.S. judge threw out its plans for handling future cancer litigation surrounding the product. Bayer said it would not increase the $2 billion already set aside for potential new claims. But shareholders looking for concrete legal alternatives might be disappointed.

Bayer and the U.S. government say Roundup is safe. Yet the firm has already spent $9.6 billion settling a class action suit with Americans who said it gave them non-Hodgkin lymphoma. If a planned review sees Bayer stop selling its weedkiller in the U.S. residential market, it could mean a 300 million euro sales hit. Based on Bayer’s 26% EBITDA margin and 8 times trading multiple, that equates to just over 600 million euros of value, a fraction of the 2.5 billion euros shed on Thursday. Investors are bracing for a worse outcome. (By Ed Cropley)

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