Bayer reported a proposed framework to settle the majority of U.S. glyphosate litigation with a $7.25 billion class agreement, while also disclosing additional settlements that increase its total legal provisions to 11.8 billion euros. The announcement was followed by a drop in the stock of more than 8%.
The company described the class settlement as covering both current and most prospective glyphosate claims in the United States. Under the proposal, payments could be distributed over a period of up to 21 years, with a concentration of payouts early in the schedule - front-loaded between 2026 and 2031. The proposal is conditional on court approval.
Management said it will raise its legal provisions from 7.8 billion euros to 11.8 billion euros. Of the total, 9.6 billion euros are allocated specifically for glyphosate liabilities and 2.2 billion euros for other matters.
Barclays analyst Charles Pitman-King assessed the combined effect of the $7.25 billion framework alongside other glyphosate and PCB settlements as addressing the bulk of Bayer's litigation overhang, including defence expenses. Barclays estimated the incremental, time-adjusted cost of the settlements at 4 billion euros, which exceeded prior expectations; the bank argued, however, that the broader scope of the agreements could meaningfully reduce Bayer's outstanding litigation burden.
Separately, Morgan Stanley analysts characterised the move as "the cost of increased certainty," noting that the proposed deals provide a structure to contain glyphosate litigation but will increase future leverage. Those analysts also highlighted the importance of a U.S. Supreme Court ruling expected by the end of June to limit opt-outs and potential future claims.
Bayer provided a guidance outline for near-term cash outflows tied to the settlements. The company expects roughly 5 billion euros of litigation payments in 2026, a figure that includes the one-off glyphosate settlement and the first-year payments under the class agreement. Following 2026, management flagged approximately 1 billion euros per year in litigation-related payments for each of the subsequent five years.
To bolster immediate liquidity, Bayer secured an 8 billion dollar bank facility and has committed not to pursue a capital increase. In addition to the glyphosate framework, the company announced a settlement covering the remaining eight PCB personal injury cases in Washington State, bringing PCB provisions to 1.9 billion euros and leaving only a limited number of state and municipal cases outstanding.
The proposed settlements, the updated provisions and the bank facility collectively aim to provide a clearer path through ongoing litigation, but they also introduce elevated near-term cash demands and higher leverage in the years ahead. The company will still face legal and procedural milestones - including required court approvals and the pending Supreme Court decision - that could shape how many claimants participate or opt out of the class agreement.
Market reaction and immediate implications
Investors reacted quickly to the announcements, sending Bayer shares down more than 8% on the day the framework was disclosed. The scale and timing of projected payments, together with the added provisions, altered market perceptions of Bayer's near-term cash profile and leverage trajectory.