Bayer Group is expected to soon resolve the majority of legal disputes in the United States related to polychlorinated biphenyls (PCBs), environmental chemicals that have been banned for decades. On Monday, Bayer announced it had reached an agreement in principle to resolve all PCB cases related to Sky Valley Education Center (SVEC), excluding previous adverse judgments against the company. However, the agreement details remain confidential and are subject to confirmation of a final settlement agreement.
The settlement involves more than 200 plaintiffs who claim they suffered health damage from PCBs at school campuses in Washington state. According to reports, over 200 students, faculty, staff, and parents developed cancer, thyroid disease, neurological damage, and other health problems due to PCB leaks from school lighting equipment, with these chemicals all manufactured by Monsanto.
Dating back to 2018, Bayer acquired Monsanto for over $60 billion, subsequently becoming embroiled in multiple lawsuits involving not only PCBs but also the herbicide glyphosate. Currently, Bayer's market capitalization stands at just over €27 billion (approximately $31 billion). Shortly after the acquisition, Bayer suffered its first loss in glyphosate litigation, triggering a series of costly lawsuits. Over the following years, Bayer's stock price continued to decline, closing at just over €18 in April this year. Recently, following news of the impending PCB litigation settlement, Bayer's stock price rose approximately 4% to €28.13.
To address US litigation surrounding the herbicide glyphosate and PCBs, Bayer set aside additional funds in the second quarter. Specifically, the company established €1.7 billion in provisions and liabilities, with approximately €1.2 billion allocated for glyphosate and €530 million for PCBs.
The company is adopting a multi-pronged strategy, aiming to significantly reduce litigation cases by the end of 2026. On one hand, Bayer remains confident in its legal defense strategy and is prepared to defend itself in court; on the other hand, since settlements are more favorable to the company than litigation and ongoing legal risks, Bayer continues to consider reaching settlements under reasonable terms.
Jefferies analysts view the impending settlement as progress in reducing PCB liability risks. However, they simultaneously warn that the Washington State Supreme Court's upcoming ruling in the Erickson case is significant. This case also involves PCB contamination at SVEC, where three teachers believe the contamination caused brain damage. Last May, the appellate court overturned the 2021 judgment that had awarded substantial compensation to these three teachers, and the case is currently awaiting a decision from the Washington State Supreme Court.
Additionally, nine adverse judgments (49 plaintiffs) against Bayer were not included in the settlement scope, and related judgments will continue to be appealed. These cases all involve specific substantive and legal issues that extend beyond the scope of the Erickson case.
Monsanto has also filed lawsuits in Missouri against the largest former PCB purchasers. These companies signed indemnification agreements in 1972 to continue purchasing PCBs for their final products. In the agreements, they promised to bear the full costs of any potential legal disputes.