The deal comes with record harvest driving crop prices to painfully low levels for farmers.
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Bayer will be desperate to get the deal through in order to not fall behind in its plans to create a place for farmers to purchase their chemicals, seeds and services from as the market continues to grow.
The proposed combination of Bayer and Monsanto would create a seed and crop-chemical giant with about $26 billion in sales.
“In order to ensure food security for everyone in the future, namely to feed these nearly 10 billion people, Bayer believes sustainable agriculture will be key”, the primer on the deal read.
But investors’ reaction in the U.S., where Monsanto shares rose 0.6 percent but remained more than $21 below the deal price, suggested deep market doubts that the deal can pass financial and antitrust hurdles.
The takeover, finalised today, is the largest ever by a German company and the biggest acquisition in the world this year, but some analysts have already labelled the deal a “horror story”.
Werner Baumann (L), CEO of Bayer AG, & Hugh Grant, Chairman & CEO of Monsanto. They’re also going to have to feed a lot more people; by 2050, projections show there will be 9 billion people living on the earth. Together with the effects of warmer temperatures, more-severe storms, less land available for farming and the need to reduce pollution and greenhouse gas emissions from farming operations, that is pressuring farmers to be more productive. As the companies described the deal as a good for the next generation of innovation for agriculture, farmers anxious the lack of competition might hurt more than help, especially after the merger of Dow Chemical and DuPont. Antitrust connoisseurs claim that supervisors will probably require the sale of some soybeans, cotton and canola seed assets. Bayer sells chemical and biologic crop protection products and the Bayer Advanced garden chemicals line. The European Union Antitrust Chief Margrethe Vestager said in June that the agency would look into whether such a large company would constitute a monopoly and raise seed prices to the detriment of farmers and ultimately consumers.
Bags of Dekalb corn seed, a Monsanto brand. “Ultimately, the Board unanimously determined that a combination with Bayer represents the most compelling value for our shareowners, employees and, critically, the growers and customers that have come to rely on us”, Grant said.
The increasing economic power of such entities quickly translates into political power, in which I can’t imagine any of the regulatory authorities opposing such mergers – with Bayer even offering Monsanto $2 billion as an antitrust breakup fee, clearly adamant there will be no legal obstructions.
Bayer AG’s $66 billion acquisition of Monsanto Co.is producing a big payday for a small advisory firm founded previous year by a team of bankers who left Perella Weinberg Partners in an acrimonious split.
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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.
