Bayer's Legal Gamble: Roundup Settlement Faces Investor Scrutiny

Bayer's shares plummeted by up to 12% on Wednesday, erasing gains from the previous day, as investors expressed skepticism over a $7.25 billion settlement aimed at resolving cancer lawsuits related to its Roundup weedkiller. The settlement is seen as a critical move for the company, which has faced significant legal risks since acquiring Monsanto in 2018.

Although JPMorgan analysts viewed the settlement as a positive step, they highlighted the lack of clarity on the number of plaintiffs required to opt in for the deal to proceed. Court approval is still necessary, and the potential for a high rate of opt-outs looms large.

Bayer's future hinges on an upcoming U.S. Supreme Court ruling regarding the validity of claims, mainly based on state law. Bayer argues that federal regulations should take precedence. Analysts caution that several legal challenges must be overcome before the settlement can take effect, adding to investor uncertainty.