* Bayer directors to form committee to discuss litigation
* Bayer says lawyer has been appointed to advise directors
* Activist shareholder Elliott says holds shares worth 1.1 bln eur
* Elliott says Bayer could unlock 30 bln euros in value (Adds statement from Elliott about Bayer's potential for unlocking value, additional detail from sources)
FRANKFURT, June 26 (Reuters) - Chemicals giant Bayer , under pressure from activist shareholders, said on Wednesday it has hired an external lawyer to advise its supervisory board and has set up a committee to help resolve a multi-billion dollar glyphosate litigation issue.
Bayer has seen its share price tumble in the wake of its $63 billion acquisition of Monsanto, which brought with it massive legal issues after more than 13,400 plaintiffs alleged the company's glyphosate weedkiller caused cancer.
Bayer, which acquired Monsanto last year, says studies and regulators have deemed glyphosate and Monsanto's Roundup weedkiller safe for human use, but the German company has struggled to contain the reputational and legal fallout.
German Chancellor Angela Merkel said on Wednesday that German farmers would stop using glyphosate eventually, a stance which is at odds with the Leverkusen-based company's view.
Activist shareholder Elliott Associates said it welcomed Bayer's new steps to improve supervision of litigation issues, as it revealed for the first time its holding of Bayer shares.
Bayer said it has hired U.S. lawyer John H. Beisner from Skadden, Arps, Slate Meagher & Flom LLP to advise the Supervisory Board on matters related to the glyphosate litigations, including trial tactics and mediation.
"His appointment is intended to add fresh and independent perspectives to the advice given to the Board of Management," Bayer said in a statement.
"We are convinced that with his expertise, John H. Beisner will provide very valuable and concrete advice on the ongoing litigation as well as the mediation," Bayer's Chairman Werner Wenning, said in the statement.
Bayer also said a new Supervisory Board committee, comprised of eight supervisory board members, will consult with the Board of Management and make recommendations on litigation strategy.
The company appears to have changed its approach to litigation, from taking a "we will prevail, we will fight to the end" attitude to seeking a settlement more quickly as a way to reassure investors and employees, a person familiar with the discussion told Reuters on Wednesday.
Elliott Associates revealed that it holds Bayer shares and financial instruments equivalent to 1.1 billion euros ($1.3 billion) worth of Bayer stock. Bayer's market value is 52.2 billion euros.
It is the first time that Elliott has acknowledged holding a significant stake in the German company. Reuters last year reported that Elliott had amassed a stake of under 3%, citing people familiar with the matter.
Elliott has a stake equivalent to 2.1% of Bayer shares, a source familiar with the matter said on Wednesday.
"Elliott welcomes these steps, and is confident that today’s statement marks a step change in Bayer’s approach to addressing the legal challenges currently facing the company," Elliott said in a separate statement.
Elliott said it believes that the creation of the special committee will provide a new level of oversight and a fresh perspective to a litigation strategy, which it said needs a radical overhaul.
Elliott also said Bayer could do more to maximise long-term value for all its stakeholders, saying the company had an opportunity to unlock more than 30 billion euros in value.
"Elliott looks forward to the company building upon today's announcement, and making a credible commitment to the exploration of long-term value creative levers beyond the immediate litigation and governance enhancements," it said.
Elliott wants Bayer to resolve its litigation issues as an immediate priority and is not pushing the company to pursue deeper structural changes right away, the source said.
$1 = 0.8789 euros Reporting by Edward Taylor and Arno Schuetze Editing by Tassilo Hummel, Edward Taylor and Susan Fenton