Food prices could surge, experts say, if a newly-proposed agricultural company acquisition is approved by regulators.
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Bernstein Research analysts said on Tuesday that they saw only a 50% chance of the deal winning regulatory clearance, although they cited a survey among investors that put the likelihood at 70% on average.
Grant said, “Farmers are starving for innovation”. And chemical giants Dow Chemical and DuPont are also planning to merge with the goal of spinning off their seed and crop chemicals operations into a major agribusiness entity.
Monsanto chairman and CEO Hugh Grant said the announcement was a testament to everything the company had achieved. “This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow”.
If all of the deals close, three companies would control almost 70 percent of the world’s pesticide market and 80 percent of the US corn-seed market.
Bayer originally offered $122 per share for Monsanto, before settling on an increased sale price of $128 per share. The Creve-Coeur based company announced on Wednesday it has reached a $66-billion deal with Bayer AG. Several factors will be weighed including what it might mean to relocate Monstanto from USA soil to Germany, the home of Bayer. Wall Street, however, isn’t so sure given the unexpected rejections of some mergers such as the Staples-Office Depot deal.
The merger still faces two hurdles: Approval by Monsanto shareholders at a meeting which could be scheduled in December or January of 2017 and review by USA and European regulatory authorities.
“I think at the end of the day it’s about opportunity”. TOUGH YEAR U.S. antitrust enforcers will look at more than product overlaps, said Moss. “The transaction brings together two different activities, but highly complementary” in terms of seeds, fertilizers and pesticides, highlighting the German group.
The move will allow Bayer to take over the controversial Monsanto’s market-leading seed production business, at a time when its competitors too have been merging.
Bayer CropScience, a listed Indian entity, posted a turnover of Rs 3,818.60 crore last fiscal.
One unknown factor that will influence these ag-related deals is the USA political landscape after the November federal election.
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Now it’s official: Monsanto is going to be swallowed up by a rival in the biggest takeover announced so far this year. “This would be the first major test of the new administration”.
