Bayer has announced a long-term compensation plan to resolve current and future claims over its herbicide, which alleges cases of non-Hodgkin lymphoma. The main law firms representing plaintiffs have filed a motion seeking preliminary settlement approval with the court in the city of St. Louis, in the state of Missouri.

The group said this class action and the Supreme Court's review of the Durnell case are independently necessary and mutually complementary steps in the company's multidimensional strategy.

Monsanto, acquired by Bayer in 2018 for around $63bn, is expected to make capped, declining annual payments over a period of up to 21 years, for a total of $7.25bn once approved by the court. With this long-term payment stream, the company gains greater certainty and control over its costs linked to current claims and potential future plaintiffs.

In addition, Monsanto has also reached confidential agreements to settle certain other Roundup cases (which contains glyphosate).

Financially, in total, and subject to a final audit, these resolutions, including legal fees, will lead to an increase in the provision and litigation liabilities from €7.8bn (including €6.5bn for glyphosate) as of September 30, 2025, to €11.8bn (including €9.6bn for glyphosate).

Based on an initial estimate of litigation-related payments of around €5bn in 226, Bayer expects negative free cash flow for that year. Finally, to reflect these agreements in its financial statements, the company has decided to postpone the publication of its FY 2025 results and its 2026 guidance until March 4.

Key points still to watch

Jefferies analysts said three residual risks remain: final court approval (noting the previous 2020 draft settlement was rejected), the opt-out rate, which could trigger termination of the agreement, and the Durnell decision. Their rating on the stock is Hold, with a target price of €25, implying 49% downside from yesterday's closing price.

For Abhishek Raval at AlphaValue, the positive lies in the terms of the proposed agreement, notably the 21-year duration and the fact that payments are annual and declining. The analyst estimates cash outflows for 2026 at around €5bn. Another key element: these future payments are expected to be financed through senior bonds and instruments that benefit from an ‘equity credit' from rating agencies-long-dated securities subordinated to senior debt, with the ability to defer interest or absorb losses. The company will not resort to a capital increase. At AlphaValue, a €6.5bn capital increase had in fact been contemplated in 2026 at a discount, which would have lifted the share count by more than 20%.

Finally, at All Invest Securities, despite a significant short-term financial impact, analysts primarily point to the prospect of a structured settlement of a landmark legal case. They also welcome the reduction in legal uncertainty, the main discount factor weighing on the stock for several years.