Bayer to buy Monsanto for $66 billion

Canola was often cited as an example of what a merged Bayer and Monsanto will look like as the companies announced Bayer’s US$66 billion purchase of Monsanto at a New York press conference this morning.

Bringing the two farming inputs companies together as one larger entity is hoped to allow them to offer a full set of tools from seed and seed coatings to weed and disease control and even digital technology to manage applications and crop planning and development.

Mergers such as ChemChina’s acquisition of Syngenta and the merger of DuPont and Pioneer have been hot topics in the agriculture world for the past couple of years. Since the end of April, Bayer’s moves to obtain the American company Monsanto have made headlines.

Hugh Grant of Monsanto, in a joint announcement with Bayer’s CEO Werner Baumann, said the $128 per share offer reflects the value of the company, about 20 times earnings for the company.

He said the deal would be in the interests of farmers, increasing the capacity of the company to deliver discoveries and new technology at a faster pace and more broadly to producers.

“Improving the time from discovery to delivery,” he said.

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Baumann also focused on the benefits to producers during announcement of the deal, which must still pass regulatory hurdles in “30 jurisdictions we need to file for in merger control purposes. In U.S. or Canada or Brazil and EU and a whole bunch of additional countries, we are requested to file in.

“The combined business will be ideally suited to cater to the requirements of farmers … because we have equal and meaningful strength in crop protection, seeds and traits and digital and analytical tools.”

Grant said there are some overlaps in the products of the two companies, but for the most part they have fewer than might be expected. Areas where regulators could find the need to require the companies to divest of some products are canola, cotton and soybeans, where the two have competing business with farmers.

Should the deal go ahead, the new company would be the largest of its kind with the chemical business centred in Manheim, Germany, and seeds, biotech products and North American operations located in St. Louis, Missouri.

Baumann said the savings, which would start to accrue in the third year, after the closing of the deal, would be about $1.5 billion annually, starting with administration, sales and marketing.

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The two companies spend a combined $2.5 billion annually on research and development of agricultural products, and Baumann said they plan to continue with large investments in that area, keeping research centred in Raleigh, North Carolina.

“Closing the gap (between food and crop) supply and demand that is unfolding in the world is what we see being achieved,” said Baumann.

“Opening the next generation of farming and enforcing Bayer as a true leader in crop science,” he said.

He said the combined company would focus on sustainable farming that would provide producers with the ability to reduce crop applications and inputs while enhancing yields and margins.

It would also create a digital platform for producers that would use tools such as satellite reconnaissance to help farmers know just what areas to treat.

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Baumann said producers aren’t forced to use the company’s products, so these would have to be providing good value to growers. He said the next generations of research by the larger company might even cause it to provide guaranteed savings or yield increases to producers.

  • Denise

    Farmers be prepared to be shafted more than you already have been.

    • Harold

      66 billion could eliminate world hunger, so it is also interesting that the same corporate giants are the same who’s existence is solely owing to world hunger.
      Seems likely then, that we will have to come up with the extra 66 billion to actually get the job done, which is also about half of Canada’s current Debt. Seems we’ve become accustomed to working double and triple time in favor of making the Corporate elite comfortable. I suppose that if one were to add up the money the the Elite throw around, the word would change to Trillion, and by no act of god. The ruse is law and the deed undone. Being the biggest and the most powerful, yet not the power to feed the hungry. That’s honorable. Bayer together with Monsanto; what a prize. Got extra wheat?
      Denise, it’s not just the farmers, it’s everybody.

      • Denise

        You bet.Consumers will be paying higher prices too. The lame propaganda line about having to feed a growing world population is so old and tired. People ,who follow this,know the truth but unless our farmers stop buying into the corporate agriculture model, there is no hope. The hungry people in the world will just have to get used to getting by on less food.
        mic.com/articles/154128/bayer-monsantos-acquisition-food-prices-gmos-food-europe-competition-agriculture-monopoly-takeover#.XFZnhefHf

  • Tanner

    Going to be getting increased input prices on two fronts now in the coming crop years. First we have Potashcorp and Agrium merging, now this. Wonder how long it will be until farmers decide to start phasing canola out of their rotation if input costs don’t properly align with prices.

  • Harold

    Denise, I would like to refer to the many children who’s skeleton’s are showing through their skin as they in-turn stare at the emptiness of Monsanto and Bayer, the ones of promise, and an empire we helped build. (66 billion) Unlike us, the conscience to do something about this is not found in the corporate giant elite nor their corporations, yet they are made more comfortable than any other human being on the planet.(Elite = 1% of world population)
    Where does Propaganda start.
    Future is Fiction as it is time not yet lived to be verified. As is evident, future-time corporate fiction does not feed now-time-hunger, but thanks for the trophy Monsanto.

    • Denise

      Are we enablers for Monsanto and Bayer or do we change the course of history through our actions? Farmers and consumers can still turn this Titanic around but it will take a level of awareness and change to limit the power and control these global dominators are grabbing.
      If we chose complacency, business as usual, and “hope for the best” be prepared for the worse. Serfdom.

      • Harold

        consumer’s in large, cannot create a conscious effort against Monsanto and the like, because in secrecy they remain hidden on Labels. Complacency is then created by design, and Monsanto the master in our homes. You cannot know what you do not know, and Complacency is then not a choice, and “business as usual” the course.
        Consumers in their daily lives may not have the ability nor the time to study their food sources, but they do however, have the ability to read a proper label. Monsanto’s greatest threat.
        Lobbying is the attempt to by-pass our democracy, and for that, corporations engaged in this activity of contempt, should be held accountable by the consumer, regardless of their product. Unfortunately, consumers have been masterfully taught, by only the means, in which to disrespect and disregard their own authority, preventing any such undertaking in mass. Corporate 101.
        What our elected members are missing, is our written and signed letters in mass.

        • Denise

          There is so much GE corn syrup ,GE corn meal (even in commercial pet food if you wonder why your pets get fat and sick and your vet bills are so high) and pesticide residues in processed foods it’s pretty hard to avoid it unless you buy real food: fruit,vegetables, and free range meat ( animals that have not been fed GE corn in feedlots and factory barns.)
          People appear to be hooked on easy to open packages of processed foods instead of cooking from scratch.
          I think the farmers are our best hope. As the price of GE seed and agrochemicals skyrocket and superweeds are sprouting up everywhere,they are reconsidering their input methods and costs.
          http://www.gmwatch.org/news/latest-news/17219-bayer-monsanto-merger-hides-an-industry-in-trouble

          • Harold

            If the consumers were as well informed, or more, as you are, where would it place the Farmer. In the same. I would say then, that society is our best hope, and that there are great unidentified forces holding society back. Those unidentifiable forces are all within the “secrecy” that we blindly have come to accept in the name of “security”, and yet we still receive none. The Freedom of information Act places us in a pleading or begging position for something owed first-hand. (secret societies cannot gauge the difference) We are TOLD what we think we WANT to know, but what we NEED to know is withheld. The sources of your information, are not Main-Stream deliberately, and by who’s hands?. By now, I assume that you know of a few of those hands. Very few recognize the school systems (K – 12) as the start to one of many. I think it is safe to say that there is not a Mainstream Media news paper nor television that reports anything GM Watch, or the like, have produced. Who decided that? The public? Who’s censorship? is there a trusted name?

  • Denise

    Maybe it won’t happen! Even Bloomberg news is talking about the nasty history of these corps.
    beyond-gm.org/the-bayer-monsanto-merger-corporate-madness-or-a-moment-of-possibility/