Bayer Up On Favorable Court Ruling Over Glyphosate Lawsuit

Bayer Up On Favorable Court Ruling Over Glyphosate Lawsuit
January 7, 2019

 

The shares of Bayer AG (XETRA: BAYN.DE, OTC: BAYZF)  increased by more than 6% on Friday to close at €64.90 ($73.75), following a favorable court ruling in the build-up to decisive trials as to whether weed killers manufactured by recently acquired Monsanto Company can cause cancer.

US District Judge Vince Chhabria approved Bayer’s request to halt evidence in supposed bellwether trials, potentially restricting evidence submitted to the jury by attorneys of the complainants. Bellwether cases are picked up to assess disputes and arrive at possible judgments that can be applied for other similar lawsuits in a pursuit to achieve a wide-ranging resolution.

The judge approved the “bifurcation” request, which implies a separation of the court proceedings into two phases. The judgment calls for plaintiff’s lawyers to prove that the chemical glyphosate in the weed killers was responsible for his cancer before providing evidence that Monsanto, now under Bayer, had acted with ill-will.

The court order is a minor success in Bayer’s efforts to provide a clear picture as to whether glyphosate can cause cancer, which it vehemently denies. The company contended that a previous court decision against it was exceedingly emotional.

Commenting on the judgment, Bayer said: “We welcome the court’s decision to focus the trial on the extensive scientific findings that are relevant for human health and confirm the safety of glyphosate. It’s an encouraging signal and a step toward a rationalization of the discussion.”

Bayer has boldly fought for its weed killers since a San Francisco jury in August ascertained that the weed killers of Monsanto were liable for cancer and that Monsanto was fully aware of or should have knowledge of potential risks, but shied away from its responsibility to caution consumers.

Bayer has time and again pointed to scientific proof and regulatory outcomes on the safe usage of glyphosate. Notably, weeks after Bayer concluded its $63 billion Monsanto acquisition, the San Francisco court’s decision caused Bayer’s shares to tumble as investors became worried about the possible scale of Bayer’s legitimately inherited liability. The company now accounts for more than 30% of its market capitalization.

Analysts and investors will carefully monitor the upcoming trials for hints on the outcome and the magnitude of possible costs for Bayer. On the 25th of February, the first federal court trial is scheduled to begin at the Northern District of California District Court.

In a note to clients, UBS analyst Michael Leuchten said: “This is a reasonably significant development, in our view, because this was not done in the first case that Bayer lost, where the jury was presented with evidence that will now only be allowed in phase two.”

Judge Chhabria clarified that this type of segregation is unusual and should be carried out with discretion. He further stated that in this case it was justified. He said that a large part of the complainant’s case involved onslaughts on Monsanto for trying to intimidate regulators and influence the public opinion.

Although such activities could expose the company to punitive costs and legal responsibility, it was a diversion to see if glyphosate caused the plaintiff’s disease, the judge said.

Aimee Wagstaff, who represents the law firm Andrus Wagstaff, is one of the co-leaders in the united case against Bayer. She opined that the bifurcation order does not modify science, which she says remains in the favor of the complainants.

In an email answer, referring to complainant Edwin Hardeman, whose case was selected in February as the first case to be brought to trial, Ms. Wagstaff said, “We’re ready to proceed with this case. We are confident that the jury will learn the truth and give Hardeman the justice that he deserves.”

The interim order, as of now, is expected to please the market. Therefore, fundamentally, we can expect the stock to move up in the short-term.

Technically, the stock has found support at 70 levels. Furthermore, the main line of the MACD indicator has crossed above the signal line. As a result, we can anticipate a bullish reversal in the days to come.

bay - technical analysis - 7th January 2019

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Sammy

Sammy

Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world


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