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(Bloomberg) -- Syngenta AG agreed to pay more than $1.4 billion to U.S. farmers who complained that the marketing of the company’s genetically modified corn seeds shut them out of the Chinese market, according to people familiar with the deal.
The settlement with more than 100,000 farmers was announced Tuesday in a Minnesota class-action trial. It resolves all farmers’ litigation in the U.S. but doesn’t include Canadian lawsuits, according to Paul Minehart, a Syngenta spokesman. Minehart wouldn’t confirm the amount of the settlement, saying the terms will be made public when the deal is presented to a judge.
The pact resulted from months of negotiations between a four-lawyer team representing farmers and Syngenta’s attorneys, according to the people familiar, who said they weren’t authorized to speak publicly about the settlement. Syngenta halted the trial involving about 22,000 Minnesota farmers to announce the deal. Those farmers were seeking more than $400 million in damages over their corn losses.
The settlement almost equals the $1.5 billion that Syngenta generated in net income last year, according to data compiled by Bloomberg. The Basel, Switzerland-based company racked up $12.8 billion in 2016 total revenue, according to the data.
Syngenta was expected to pay $1 billion to $2 billion to resolve the corn litigation, so the settlement “seems about right,” Jonas Oxgaard, an analyst at Sanford C. Bernstein & Co. said in an email Tuesday. Still, some plaintiffs’ lawyers had been privately saying they hoped to force the company into a $3 billion resolution of the corn claims.
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The accord comes three months after Syngenta lost a $218 million jury verdict to a class of Kansas farmers, in the first trial over the corn-contamination claims. Several other trials were pending as lawyers pursued suits on behalf of hundreds of thousands of corn growers claiming as much as $13 billion in losses. The farmers alleged Syngenta caused five years of depressed corn prices. It’s unclear whether the Kansas verdict is covered by the settlement.
The Minnesota farmers claimed Syngenta, the Swiss agrochemical giant, rushed its GMO seed to market before getting import approval from China. In 2013, China stopped taking shipments from the U.S., calling the corn contaminated. The farmers said Syngenta misled them on when the Chinese would approve the seed. Corn prices dived and didn’t recover because China found other sources, the farmers said.
The settlement comes as China National Chemical Corp. is pushing ahead with its $43 billion acquisition of Syngenta, designed to transform the state-backed company into the world’s biggest supplier of pesticides and agrochemicals. U.S., Chinese and European Union regulators have approved the deal, but the buyout is awaiting a nod from other countries.
Syngenta officials had denied causing harm or damages. Two droughts in years leading up to the launch of the company’s Viptera seed elevated prices, Syngenta lawyer Mike Brock told jurors at the Minnesota trial. When Viptera was released, heavy rains set off a bumper crop in the U.S. “It rained, and when that happened, the bottom dropped out of the price of corn,” he said.
Grain exporters Archer-Daniels-Midland Co. and Cargill Inc. have accused Syngenta in separate lawsuits of carelessly allowing its seed to taint U.S. corn, prompting the Chinese rejection. Those claims aren’t covered by the settlement, the company said in its statement.
The Minnesota case is In re Syngenta Litigation, 27-cv-15-3785, District Court, Hennepin County, Minnesota (Minneapolis).
(Corrects top estimate in fifth paragraph.)
--With assistance from Jack Kaskey and Todd Melby.
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