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Bayer Monsanto

Massive agribusiness deal: Bayer clinches Monsanto for $66-billion

German drug and crop chemical maker, Bayer, last week clinched a $66-billion takeover of US seeds company, Monsanto, ending months of price wrangling. Reaction to the deal – the largest all-cash deal on record – has been largely rude…

The $128-a-share deal, up from Bayer’s previous offer of $127.50 a share, emerged as the signature deal in a consolidation race that has roiled the agribusiness sector in recent years, due to shifting weather patterns, intense competition in grain exports and a souring global farm economy.

“Bayer’s competitors are merging, so not doing this deal would mean having a competitive disadvantage,” said fund manager Markus Manns of Union Investment, one of Bayer’s top 12 investors.

Grain prices are hovering near their lowest levels in years amid a global supply glut, and farm incomes have plunged.

But the proposed merger will likely face an intense and lengthy regulatory process in the US, Canada, Brazil, the EU and elsewhere. Hugh Grant, Monsanto’s chief executive, said the companies will need to file in about 30 jurisdictions for the merger.

Competition authorities are likely to scrutinise the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover that they say risks overpaying and neglecting the company’s pharmaceutical business.

If the deal closes, it will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.

What the newly-formed company would be named is unclear. Grant said that the future of the Monsanto brand has not yet been discussed, but the world’s largest seed company is “flexible” about the name going forward.

The transaction includes a $2-billion break-up fee that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.

Source: Reuters

Related reading:

Bayer’s $66bn takeover bid of Monsanto called a ‘marriage made in hell’

German chemical giant Bayer’s $66bn (£50bn) deal to buy controversial US agrochemical giant Monsanto and create the world’s largest seeds and pesticides company is “a threat to all Americans” and should be blocked, Bernie Sanders said.

Speaking shortly after the deal was announced, the Vermont senator, who ran against Hillary Clinton for the Democratic presidential nomination, said: “The attempted takeover of Monsanto by Bayer is a threat to all Americans.”… The Guardian

Bayer deal for Monsanto follows agribusiness trend, raising worries for farmers

..It is a common plight of farmers across the United States, with the global agriculture industry in a wrenching downturn. Because farmers have produced too much corn, wheat and soybeans, they have been forced to slash prices to sell their crops. They have also reduced spending on seeds, pesticides and fertilizer, which has eaten into sales at agribusiness giants, including Monsanto and DuPont.

In response, these companies have sought multibillion-dollar deals to cut costs and weather the industry’s storm…. The New York Times

Six companies are about to merge into the biggest farm-business oligopoly in history

Big farms are about to get a lot bigger. With six agricultural giants on the verge of merging into three separate companies, consumers and farmers are feeling uneasy about the global implications and how it might impact the food system…. Quartz.com

People aren’t thinking straight about Bayer and Monsanto

Bayer’s proposed purchase of Monsanto, the biggest deal of the year so far, has led to a heated public debate over economic concentration. Unfortunately, both sides are failing to identify the key issues behind the potential transaction…. Bloomberg

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