Bayer hopes merger will aid wheat program

Potential merger with Monsanto should accelerate work with hybrid wheat varieties, says Bayer’s research head

SAN ANTONIO, Texas — Wheat will be one of the crops that benefits most from Bayer’s acquisition of Monsanto, say the heads of research for both organizations.

“Wheat is one of the areas that this potential merger is going to really accelerate,” Adrian Percy, global head of research and development with Bayer, told reporters attending a news conference at the 2017 Commodity Classic in San Antonio.

Bayer launched its wheat breeding program in 2010 and hopes to have hybrids on the market in the 2020s. It has also invested heavily in wheat chemistry. Monsanto’s strength is germplasm and traits.

“Bringing these two programs together is really going to accelerate the innovation that we certainly need in the cereal area,” said Percy.

Robert Fraley, chief technology officer with Monsanto, said wheat is an example of a crop that does not have the level of investment it needs in either Bayer’s or Monsanto’s individual programs.

“You put those together and you create the capability to bring a lot of new technology into wheat,” he said.

“I’m excited about it because I think wheat is a crop that quite frankly needs new technology, and the technology is there and I think we can apply it.”

Bayer has made submissions in 20 of the 30 jurisdictions where the merger requires regulatory approval. Percy said everything is on track, and the company anticipates the deal closing by the end of this year.

“This deal between Monsanto and Bayer is all about innovation,” he said.

“It’s all about accelerating innovation and about growth.”

Percy provided an example of how the merger will get new products to market faster. He said chemical companies introduce new herbicides and then it might take a decade before a seed technology company comes up with a herbicide tolerant trait to pair with the chemistry.

“With this combination, we have the opportunity to co-develop,” he said.

If the deal receives all the necessary regulatory approval, the new research and development team will consist of 10,000 researchers, technicians and scientists, half from each company. It will have a $3.5 billion annual budget.

Fraley said he was initially “taken aback” and did a little head shaking when he heard that Bayer was attempting to acquire Monsanto.

But after some reflection, he realized Monsanto had come to the conclusion over the last three or four years that it needed to invest more in research and development, and this was the perfect opportunity to obtain that extra capital.

“We’re going to improve yields dramatically, we’re going to reduce farmers’ costs and we’re going to help simplify a lot of the decision making,” he said.

Fraley doesn’t believe there will be too much trouble with regulators because the two companies have complementary businesses with little overlap. Bayer is focused on chemistry and Monsanto on traits and data management.

One area where there is significant overlap is canola breeding. They are the two big players in that crop. The new entity would account for 65 percent of canola acres in Canada and 95 percent of the canola trait business.

Percy said Bayer recognizes the combined company would have a huge market share in canola.

“Possibly divestment is an option, but that’s something that has to be discussed with the regulators,” he said.

Fraley said transparency and public discourse will be crucial when introducing any new products.

“Certainly if there’s anything that we’ve learned from our experience with GMOs, is we know that good science by itself is not enough,” he said.

“It has to be accompanied by great communication and a transparent relationship with the public.”

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