Bayer shares dropped more than 10% after its subsidiary Monsanto was ordered to pay $289 million in damages last week.
It was the sharpest drop in over two years for the German pharmaceutical company, and comes only months after its $66 billion acquisition of the seed and agricultural chemical giant. Monsanto said it would appeal the verdict.
In the first lawsuit of its kind, Monsanto was found liable for a design defect and for failing to warn customers of the dangers of using the weedkiller Roundup. The lawsuit, brought by former school groundskeeper Dewayne Johnson, alleged that Monsanto’s glyphosate-based weedkillers, including Roundup, cause cancer. Johnson was diagnosed with cancer in 2014 and his doctors were unsure he would live to hear the verdict. He will receive $39 million for his losses. Jurors fined Monsanto an additional $250 million as a punishment.
The Bayer-Monsanto tie-up was more than two years in the making and sparked antitrust concerns before it was approved by the U.S. Department of Justice. Concerns about the merger revolved around its potential impact on prices for farmers. Few expected that shareholders would be penalized.
Monsanto faces at least 5,000 similar lawsuits in the United States. In 2015 EU regulators said glyphosate is unlikely to cause cancer in humans. According to Monsanto Vice President Scott Partridge, 800 studies and reviews have also found no link.
