For Bayer, the purchase of Monsanto has been an unending headache

Bayer could do with a few aspirin these days.

A judge in California last week rejected a request by the German chemical giant, which makes the painkiller, for a retrial of a case in which jurors awarded the plaintiff $80 million after concluding that Roundup, Bayer's bestselling herbicide, caused his cancer.

The judge's decision to reduce damages to $25 million offered only marginal relief. The verdict could open the floodgates to 13,400 other plaintiffs around the world who claim to have been harmed by Roundup.

It comes on top of another headache caused by Austria's lower house of parliament, which voted this month to ban glyphosate, Roundup's active ingredient, from November.

'Probably carcinogenic'

The glyphosate lawsuits — and the political backlash — stem from a finding by a division of the World Health Organization, which said in 2015 that the chemical was "probably carcinogenic."

The study, controversial among scientists, has dogged Bayer since it bought Monsanto, Roundup's U.S.-based inventor, in 2018. Bayer's market capitalization has nearly halved since the takeover, to 55.5 billion euros ($62.4 billion), a little less than the $63 billion that it paid for the U.S. chemical giant.

The uncertainty over the toll of glyphosate litigation explains much of the fall. It nevertheless looks like an overreaction. The lawsuits could certainly be painful but look unlikely to prove fatal.

Markus Mayer of Baader Bank, an investment bank, estimates that they could cost between $5.6 billion and $22.5 billion — a fair bit less than the drop in Bayer's share price would imply.

Bayer plans to appeal the verdict in California. At the end of June it signaled that it might be open to a settlement to end its legal battles once and for all.

It set up a special committee to examine its legal strategy and appointed John Beisner, a combative lawyer, to advise on trial tactics.

Losing Roundup altogether would similarly hurt but not kill the German firm. The weedkiller accounts for 12% to 15% of sales at Bayer's crop-business and perhaps $1.1 billion, or around a quarter, of Bayer's operating profit. Despite talk of prohibitions around the world, many farmers fear that losing Roundup will reduce their yields — and have made their concerns known to their political representatives.

The Austrian ban must still be approved by the upper house of parliament. It may be incompatible with the E.U.'s decision in 2017 to renew glyphosate's license for use until 2023.

Searching for alternatives

In the longer term the picture is blurrier still. Counterintuitively, bans may end up benefiting Bayer.

Last month, the company announced that it will spend $5.6 billion to research alternatives to glyphosate-based weedkillers. That could position it ahead of rivals when the popular weedkiller is eventually phased out.

If, that is, Bayer survives that long. Some investors, including Elliott, a feisty U.S. hedge fund, have called for the company to excise the toxic agribusiness from a healthy drugmaker (Bayer's original operation).

To reassure investors the company's management is cutting 12,000 jobs and has considered selling its animal-health, sun-cream and foot-care businesses. But it has resisted a full split, having fought hard to combine the two firms.

A separation would contain the legal risk to a smaller unit. Analysts at AB Bernstein, a research firm, who recommend a split, point out that research overlap and technology transfer between the health and crop businesses are minimal.

Bayer's valuation is so low that a willing buyer may come forward. Many shareholders may pounce on the opportunity to rid themselves of the migraine.