CHARLES: It is actually a remarkable wave of consolidation. Farm incomes have plunged.
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Investors also expressed some skepticism. Competition in an industry usually holds down prices.
Bayer said Wednesday that it would pay Monsanto shareholders $128 per share – in cash.
Bayer and Monsanto executives said they won’t identify areas of business overlap before regulators in the European Union, U.S., Canada, Brazil and two dozen other countries review the acquisition for potential antitrust issues.
Bayer has been courting the U.S. crops and seeds specialist for months. The Swiss company fended off that offer only to agree later to a takeover by China’s state-owned ChemChina.
Elsewhere in the industry, USA chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness.
“I don’t think Iowa farmers are happy about the consolidation in the industry, but we understand the pressures and the costs” for seed and chemical companies to develop new products and get them approved, said David Miller, director of research at the Iowa Farm Bureau Federation and a corn and soybean farmer in Lucas and Clarke counties in south-central Iowa. Other regulators have cracked down on deals that aid tax avoidance or risk harming national security.
By accepting Bayer’s offer, the largest cash acquisition proposal on record, Monsanto is set to give the German company a shot at grabbing the top spot in the fast-consolidating farm supplies industry, combining its crop science business with Monsanto’s strength in seeds.
“This merger is not a slam dunk”, said Diana Moss, president of the American Antitrust Institute. He named the company for his wife, Olga Monsanto Queeny, and under his son, Edgar, the company expanded into pharmaceuticals, fertilizer, laundry detergent and electronic components.
Werner Baumann, chief executive of Bayer, said: “We are pleased to announce the combination of our two great organisations”.
The value of assets Bayer is willing to divest is to be revealed by next week, when details of the merger agreement become public, according to sources familiar with the deal.
At 1140 GMT, Bayer shares were up 2.2 percent at 95.32 euros. Brown said the council had taken no formal position on the proposed deal.
Dan says there are a number of questions: Will people still march against Monsanto if Monsanto is no more?
Monsanto and Bayer officials said the merger would create an agricultural behemoth, resulting in an “innovative engine” that could more quickly develop new products to help farmers boost yields and cut costly inputs.
The St. Louis company has reaped rewards from agriculture’s biotechnology revolution, with more than 90% of US corn, soybean and cotton fields planted with genetically engineered varieties.
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In terms of the US corn seeds and traits market, according to Morgan Stanley Research, a merged Dow and DuPont would have about a 41 percent market share, while a merged Monsanto-Bayer would have about 36 percent. Monsanto-Bayer would have 28 percent.
