Shares of Bayer tumbled on Wednesday after an early rally reversed, as market participants scrutinised the company's late Tuesday announcement that it had reached a proposed $7.25 billion agreement intended to resolve tens of thousands of current and future product liability claims related to its Roundup weedkiller.
The German pharmaceuticals and crop protection group had seen its stock climb 7.3% on Tuesday following news of the proposal, but the advance was erased on Wednesday when the share price slid as much as 9.2% intraday and was down about 8% as of 1008 GMT.
Market commentators argued the settlement, while progress, left significant questions unanswered. Analysts at JPMorgan said the proposal moved the situation in the right direction but noted the company had not disclosed the number of plaintiffs who would need to opt in for the agreement to proceed. They also flagged uncertainty over how many plaintiffs would be willing to accept the terms.
JPMorgan observed that there were still issues to resolve, including the requirement for court approval and the risk of a large number of opt-outs.
Markus Manns, a portfolio manager at Union Investment, likewise cautioned that the plan was "not yet the breakthrough that many investors had hoped for", underlining that investor optimism remained tentative.
Both JPMorgan and Manns emphasized the central role of an outstanding U.S. Supreme Court decision on the overall merits of the lawsuits. Bayer has petitioned the Supreme Court to invalidate the claims, which are mainly grounded in state law, advancing the argument that federal regulation should take precedence.
Stephan Wulf, an analyst at brokerage Oddo BHF, warned that a sequence of legal approvals and procedural steps must be completed before the settlement could take effect, and that the Supreme Court's eventual stance would add an additional layer of uncertainty. "This is not a done deal yet," he said.
A Bayer spokesperson declined to speculate on the company's chances before the Supreme Court. Instead, the spokesperson pointed to a December legal brief by the U.S. Solicitor General, which indicated that the administration of President Donald Trump agreed with Bayer's interpretation of the law at issue.
The report also included a currency note showing the exchange rate used in coverage: ($1 = 0.8445 euros).
Readers were further presented with an inquiry about whether BAYGN represented a bargain at present, accompanied by a mention of a Fair Value calculator that utilises a mix of 17 valuation models to assess stocks, though the details of any valuation outcome were not provided in the company's announcement.
Contextual note - The proposed settlement is framed as an attempt to resolve long-running litigation connected to Roundup, which Bayer acquired as part of its 2018 takeover of Monsanto. The company and market observers continue to await further procedural developments, including court approval, the extent of plaintiff participation, and the outcome of the Supreme Court review.