All up there were about half a dozen major companies in the seed sector, “so I can’t see there would be a major impact in what’s happening in seeds in New Zealand”, Hampton said, adding that he speculated that Monsanto’s GM technology was a major driver for Bayer’s takeover offer. “DuPont is merging with Dow, and the China National Chemical Corp.is buying Syngenta, which is now the world’s biggest seller of agricultural chemicals”.
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“We are creating a company that can offer integrated solutions from seeds and traits to crop protection to digital agriculture that helps farmers manage the increasing global food demand”. The deal gives Bayer more than 2,000 varieties of seeds for crops such as corn, soybeans, and wheat.
The Bayer-Monsanto deal includes a $2bn break-fee payable by Bayer to its U.S. rival should it walk away from the agreement, or if it gets blocked by regulators, underscoring the significant risk that the takeover faces from competition authorities in a number of countries.
Bayer intends to fuse its prowess in pesticides, where it ranks among the world’s largest suppliers, with Monsanto’s capabilities in seed genetics and biotechnology, to create the world’s largest crop supply company in terms of sales. Based on Monsanto’s closing share price on May 9, 2016, the day before Bayer’s first written proposal to Monsanto, the offer represents a premium of 44 percent to that price.
Monsanto, Dan notes, “has come to represent, in a shorthand way, lots of things that some people love to hate: genetically modified food; patents on seeds; lawsuits against farmers for saving and replanting those seeds; and corporate influence over government food policy”. The combination also brings together both companies’ leading innovation capabilities and R&D technology platforms, with an annual pro-forma R&D budget of approximately Euro 2.5 billion. Bringing the two companies together could also streamline the development of new herbicide-tolerant traits, they said.
Monsanto will be taken over by German-based Bayer. “I’m more anxious about what it will mean for innovation in agriculture”. A Bayer spokesman said it’s too soon to provide details on how the giant company will be managed. “That’s in addition to a plastics business, diagnostic imaging products, health products for animals and a biotech division”. Bayer has confirmed sales and cost synergies assumptions in due diligence and expects annual EBITDA contributions from total synergies of approximately United States dollars 1.5 billion after year three, plus additional synergies from integrated solutions in future years.
Some Bayer investors in recent months raised concerns about what they saw as an abrupt shift in strategy under a new CEO – Mr. Baumann assumed the job May 1, just weeks before launching the bid.
Bayer and Monsanto executives wouldn’t discuss the fate of the Monsanto name, but said the combined company’s seeds and North American business will have headquarters at Monsanto’s St. Louis base.
The accord did little to bolster Monsanto’s stock in NY trading this morning, with its shares hovering at $106 a share as investors fret about regulatory approval for the deal amid a dramatic reshaping of the crop and seed industry.
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“It’s a very finely tuned marketplace and farmers are highly sensitive to pricing”, he said. “This combination with Bayer unlocks the next tranche of growth and opportunities”.
