By Joel Rosenblatt and Marthe Fourcade
Bayer AG rallied on optimism that the tide is turning after a rocky year as the U.S. government backed its embattled herbicide Roundup.
The stock reached its highest level in more than a year, rising as much as 3.5% in Frankfurt. The U.S. Environmental Protection Agency on Friday sided with the company’s appeal of a high-profile California ruling against Roundup, the weedkiller accused of causing cancer.
Bayer has struggled to defend its $63 billion purchase of Monsanto, which delivered the controversial Roundup, as lawsuits piled on and the company’s market value melted away.
Rather than celebrate its crowning as the world’s biggest maker of seeds and crop chemicals, Bayer lost three U.S. trials where people claimed that Roundup caused their cancer and faced an unprecedented rebuke at a shareholders’ meeting in April.
By the middle of the year, 12 months after the Monsanto deal had closed, the company had lost about half its value. The shares have since recovered a little, bringing their gain over the course of 2019 to 21%. The stock touched 74 euros early Monday, the highest level since late October 2018.
Bayer has appealed the U.S. verdicts and insists the product is safe. On Friday, its efforts to appeal a federal jury verdict finding Roundup causes cancer got a boost from the EPA.
A jury’s finding that Roundup is defective because it’s sold without a cancer warning should be overturned, the agency argued in a filing to a San Francisco-based appeals court.
The EPA said it reviewed and approved the Roundup warning label. The federal agency said lawyers representing Edwin Hardeman, who sprayed the product for decades on his property and sued Monsanto after developing lymphoma, ignored its authority and instead improperly relied on California law to claim the omission resulted in a flawed label.
Bayer said that it’s pleased the EPA “expressed its views in this appeal, which are consistent with the preemption arguments we have made throughout this case.”
There were 42,700 others suing the company over the product as of October. Bayer said earlier this month that it agreed to postpone two pending U.S. trials involving its Roundup weedkiller to allow time for mediation on a possible settlement.