The latest mega-merger combining two of the world’s largest farm suppliers aims to reshape the agricultural business and chemical sectors.
Advertisement
Bayer has been pursuing Monsanto since late May, when it made an initial bid of $122 per share (109 euros), valuing the USA genetically modified (GM) crop giant at $62 billion. In addition, Bayer has committed to a United States dollars 2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals. As of 2015, Monsanto’s Deltapine brand had 31 percent of the market while Bayer’s Fibermax and Stoneville brands combined for 39 percent, according to a U.S. Department of Agriculture report published previous year.
Since then the German chemicals behemoth has raised its offer twice, first to $125 per share in July and then to $127.50 last week, but was rebuffed each time.
As the global agricultural sector races to consolidate, Bayer AG’s $66 billion all-cash deal to acquire Monsanto Co will test growing political and consumer unease in the United States and overseas over the future of food production. A company called Syngenta which is a big pesticide company based in Switzerland is being bought by the China National Chemical Corporation, and now comes Bayer buying Monsanto. Bayer would also benefit from the US company’s major presence in North America.
Bayer’s takeover of Monsanto is likely itself to attract close scrutiny from anti-competition regulators because of the sheer size of the combined company and the control it would have over the global seeds and sprays markets.
In a release Wednesday, German chemical giant Bayer announced that it has purchased the American biotechnology company Monsanto for $66 billion, the most expensive acquisition of the year.
The deal will create a company with more than a quarter of the combined world market for seeds and pesticides in the farm supplies industry. “They (farmers) are getting very low prices for the huge amount of crop rolling in”. In August, Senator Charles Grassley (R., Iowa) set a hearing for September 20 to question seed-industry executives and experts. “We have so far received encouraging feedback, but nothing beyond that”, Baumann said, adding that regulatory filings will now begin. The board of the two companies have unanimously approved the agreement. “We feel quite good”, he noted, regarding regulatory approval.
Spokesmen for both companies declined to comment on the new proposal.
Advertisement
But U.S. antitrust enforcers will look at more than product overlaps in assessing the proposed merger, said Moss. Dow Chemical and DuPont are planning a merger and ChemChina is purchasing Syngenta after the Swiss firm declined a takeover by Monsanto past year.
