The deal, which is valued at $66 billion, including debt, must be approved by Monsanto shareholders and regulators. The combined entity will control almost a quarter of the global market for seeds and crop chemicals.
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The Bayer-Monsanto deal is not the only consolidation taking place as of late.
And while the jobs outlook remains unclear, Grant emphasized that the deal could be a boost to the biotechnology community in St. Louis, where the Monsanto headquarters will remain.
Speaking generally rather than about a specific merger of Monsanto and another company, Fraley continued, “I think the changes we’re seeing in this industry are not only healthy, but they’re the kind of changes that are going to be needed in order to enable the kind of investments to bring the kind of products that farmers are going to need and want in the future”.
The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St Louis, Missouri, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, as well as other locations throughout the United States and around the world. Meanwhile, the Digital Farming activities for the combined business will be based in San Francisco, California. He said the deal “represented the most compelling value for our shareholders”.
Grant said he thought the deal would ultimately be “a good thing” for St. Louis because Bayer has an incentive to invest in the region’s strong pool of plant science talent and engage with a vibrant ag-tech startup community. So, we are number one or number two in many European areas.
But ultimately, joining Bayer has the same logic to it that Monsanto’s bid for Syngenta past year does. The company also makes a variety of products to protect crops from pests, disease and weeds; its Roundup line is the world’s best-selling weed killer. “It’s the last big industry in the world to be digitised”, said Fraley. The deal “creates great synergies with seeds and traits and data sciences”.
Bayer has a smaller seeds business but is mainly in the pest and disease product side of the agri-chemical market, including seed treatments, while Monsanto’s chemicals were more in the herbicide and weed control side of the market.
In 2000, Monsanto merged with pharmaceutical company Pharmacia. As part of drugmaker Pfizer’s deal to buy Pharmacia, Monsanto was spun off as a stand-alone agricultural chemical and biotech company, leaving its 100-year history in chemicals and drugs behind to focus exclusively on the genetically-engineered seeds that transformed agriculture. Less than three years later, it reemerged as a local company.
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And this deal isn’t done yet. With that in mind and the fact that Monsanto-Bayer deal will be scrutinized by antitrust authorities of more than 25 countries across the globe, whether the deal would complete is at best a coin-flip.
