The victory obtained before the United States Supreme Court comes ahead of the industrial restructuring and eases the burden of one of the most costly litigations in Bayer’s recent history. A few days after the judges’ decision, the German group announced the birth of Ruveon, a new company destined to manage the glyphosate business in the United States, where Roundup continues to be at the center of a heated scientific and judicial debate despite the company persisting in asserting the safety of its active ingredient.
THE NEW ERA OF GLYPHOSATE IN THE USA
Bayer has decided to concentrate all activities related to glyphosate in the United States into Ruveon LLC, a new entity headquartered in St. Louis, Missouri, which will still remain part of the Bayer Group. The company will be entrusted with all functions related to the US glyphosate business, from pricing to commercial strategies, up to production and logistics. The teams dedicated to products and commercial activities will also merge into the new structure, which will have exclusive responsibility for managing the sector in the United States.
According to Bayer, the operation represents an operational step of the five-year strategic plan of the Crop Science division, developed to strengthen growth, resilience, and profitability and to make the organization more efficient in a market defined as highly competitive. The company claims that Ruveon will be a “more agile and better positioned” operator in a commodity market that requires a specialized approach, continuing to guarantee the supply of Roundup brands and glyphosate-based products to US agriculture.
For Bayer, the consolidation of activities will allow dedicating more resources both to Ruveon and to the rest of the group to meet customer needs.
WHO WILL LEAD RUVEON
At the helm of the new company is Alfonso Alba Ordóñez, a manager with over thirty years of experience in the Bayer Group and roles held in Europe, South America, North America, and China. The role of Executive Vice President and head of commercial activities has been assigned to Steve Knodle, who will oversee sales and marketing of glyphosate in the agricultural, industrial, turf, and ornamental plant sectors.
BAYER’S LATEST VICTORY
The announcement of Ruveon came less than a week after a ruling destined to profoundly impact the litigation related to Roundup. With a decision taken by a majority of seven judges against two, the United States Supreme Court overturned the verdict by a Missouri jury that had awarded $1.25 million in damages to John Durnell, who attributed the onset of non-Hodgkin lymphoma to glyphosate after years of exposure to the product.
The judges, explains Reuters, accepted Bayer’s argument that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), the federal regulation governing pesticides and labeling, prevents lawsuits based on state laws alleging failure to warn about carcinogenic risks from proceeding. Judge Brett Kavanaugh also noted that the Environmental Protection Agency (EPA) has repeatedly concluded that glyphosate does not cause cancer and has never required a warning label of this kind on Roundup packaging. Judge Ketanji Brown Jackson expressed the opposite view, stating that the decision “unjustifiably closes the doors of courts to citizens like Durnell.”
THE LITIGATION INHERITED FROM MONSANTO
Bayer acquired Roundup in 2018 with the $63 billion purchase of the agrochemical company Monsanto. That operation quickly turned into a huge legal problem, with over 100,000 people filing lawsuits in US courts claiming that glyphosate was linked to cancer onset.
While continuing to assert that decades of studies demonstrate the safety of the active ingredient and that the EPA has always confirmed the absence of carcinogenic effects, the group has already removed glyphosate from the consumer version of Roundup and, in February, proposed a $7.25 billion settlement to close tens of thousands of proceedings, still leaving out some pending lawsuits estimated at about $1 billion in value.
THE MARKET REWARDS BAYER
The Supreme Court’s decision was positively received by investors. Bayer shares, wrote Reuters last week, gained about 16% in the session following the ruling. Deutsche Bank analysts revised their rating on the stock from “hold” to “buy,” arguing that the company “should be able to effectively limit glyphosate-related exposure within the provisions already made.”
Markus Manns, fund manager at Union Investment, also called the ruling “a milestone,” stating that Bayer is entering “a new era,” while noting that the final closure of the matter will also depend on the approval of the settlement agreement expected in the coming months.
