Bayer takes a giant leap toward investability

Bayer AG

26/06/2026 11:32

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Liam  Proud

    LONDON, June 26 (Reuters Breakingviews) - Investing in Bayer BAYGn.DE has required an unusual blend of skills in recent years. A key driver of the €46 billion German conglomerate's share price has been a series of unpredictable courtroom machinations related to the company's weedkiller Roundup, acquired as part of its 2018 Monsanto takeover. A landmark U.S. Supreme Court victory on Thursday, however, may mark the beginning of the end for the company's litigation saga. Shareholders can get back to asking normal corporate-finance questions again, like whether it's time for a breakup of the seeds-to-drugs group.
Bayer, run by CEO Bill Anderson, earlier this year laid out plans to round off the Roundup legal epic. The first component was a proposed U.S. nationwide so-called class settlement. That is intended to resolve claims alleging that the product's active ingredient causes non-Hodgkin lymphoma, a type of cancer, which the company denies. Bayer increased its legal provisions and other litigation-related liabilities to €11.8 billion at the time. The second part was a separate but related Supreme Court case, which the group on Thursday won, sending its shares up almost a fifth.
The justices said that claimants cannot pursue the company in local state courts for failing to warn about cancer risks. This is because the U.S. Environmental Protection Agency concluded that there was no such risk, meaning that a label warning was not required. The Supreme Court ruling therefore effectively prevents a patchwork of cases based on state law from moving forward.
It means that a courtroom blessing of the big class settlement is now the key remaining milestone. A final approval hearing on that matter was scheduled for July 9, but has now been pushed back. A longer timeline suits Bayer because it means more possible claimants can opt in to the process, increasing the finality of any future settlement.
The fact that Anderson has already set money aside for this matter makes it much easier for investors to handicap. After Thursday's share-price rise, the company trades at more than 8 times 12-month forward EBITDA, up from a multiple of 7 in early June. That puts Bayer above pharmaceutical peer Sanofi SASY.PA, which trades at 6 times forward EBITDA according to Visible Alpha, and one step closer to crop science rival Corteva's CTVA.N multiple of 13.
The next question is what Anderson can do to close that gap even further. A breakup arguably makes sense, given Bayer's disparate businesses spanning drugs to seeds and more. Other questions include whether the group's net debt levels are too high, at almost 4 times 2026 EBITDA using Visible Alpha data, or how quickly the divisions can grow. These are tricky issues, but at least they're familiar terrain for stock-market investors.
Follow Liam Proud on Bluesky and LinkedIn.
     
CONTEXT NEWS
The U.S. Supreme Court on June 25 reined in thousands of lawsuits pursued in state courts accusing Bayer of failing to warn users that the active ingredient in its Roundup weedkiller causes cancer.
The justices in a 7-2 decision overturned a jury verdict in Missouri awarding $1.25 million to a man named John Durnell who said he was diagnosed with non-Hodgkin lymphoma after years of exposure to glyphosate in Roundup. The Supreme Court agreed with Bayer that a U.S. law that governs pesticides precludes so-called failure-to-warn claims, that are brought under state law, from moving forward in court.
Conservative Justice Brett Kavanaugh, who authored the ruling, said the U.S. Environmental Protection Agency has concluded glyphosate does not cause cancer and has not required a cancer warning on Roundup.
Bayer's Germany-listed shares closed roughly 19% higher on June 25.

(Editing by Neil Unmack; Production by Streisand Neto and Oliver Taslic)
((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))