Deal would create the world's biggest seeds and pesticides company

1. Bayer confirms $66bn Monsanto takeover
2. Bayer's $66bn takeover bid of Monsanto called a "marriage made in hell"

1. Bayer confirms $66bn Monsanto takeover

BBC, 14 Sept 2016

German chemicals giant Bayer has confirmed its record-breaking $66bn takeover of GM seeds business Monsanto - a deal that would create the world's biggest seeds and pesticides company.

The offer, a record cash takeover, values Monsanto shares at $128 and will create a company worth $66bn (£50bn).

As well as farm-products, Bayer also sells healthcare products including Alka-Seltzer.

Monsanto is known for its genetically modified seeds for crops.

The use of such seeds is widespread in the US, but plans to introduce these into Europe have prompted fierce protests by environmental activists.

Bayer said feeding the world's population, which is expected to rise by around a third by 2050, was a massive challenge.

Werner Baumann, chief executive of Bayer, said the takeover would bring benefits across the board and deliver "substantial value to shareholders, our customers, employees and society at large".

Fight back

The tie-up, which will give the new company control of more than 25% of the world's supply of seeds and pesticides, comes amid a wave of mergers in the agriculture sector.

Falling crop prices have seen farmers cutting back on buying seeds and agricultural chemicals, such as herbicides and pesticides, leading to lower profits for suppliers.

The industry has been fighting back in order to save business costs.

Rivals including Dow Chemical, DuPont, and Syngenta have all announced tie-ups recently, although some have yet to be cleared by regulators.

Bayer's takeover of Monsanto is likely itself to attract close scrutiny from anti-competition regulators because of the sheer size of the combined company and the control it would have over the global seeds and sprays markets.

Farming groups have raised concerns that such mergers could lead to fewer choices and higher prices.

Professor John Colley of Warwick Business School said, "Bayer's acquisition of 'Frankenstein' crop producer Monsanto could be a horror story for both Bayer and its customers: the farmers."

He said there were a number of worrying issues, "The farmers will lose out as product ranges are rationalised and attempts are made to increase prices.

"Clearly Bayer will realise cost savings from the acquisition, but they have had to pay an enormous price for Monsanto at a 45% premium to the previously undisturbed share price."

There is a $2bn break fee if the deal does not complete.

Bayer shares are 3% higher in Frankfurt. Monsanto shares were up 1.6% ahead of the US market open.

2. Bayer's $66bn takeover bid of Monsanto called a "marriage made in hell"

Rupert Neate
The Guardian, 14 Sept 2016

* Vermont senator Bernie Sanders leads outcry over merger, saying deal is "a threat to all Americans" and should be blocked by regulators

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 on Wednesday.

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.”

“These mergers boost the profits of huge corporations and leave Americans paying even higher prices. Not only should this merger be blocked, but the Department of Justice should reopen its investigation of Monsanto’s monopoly over the seed and chemical market.”

He called for the proposed takeover to be blocked and for a fresh investigation into Monsanto’s current control of the seed market.

The proposed deal, the biggest corporate takeover deal so far this year, follows a wave of consolidation in the seeds and agriculture industry and has raised concerns among politicians, scientists, regulators, farmers and activists who called the deal a “marriage made in hell”.

Werner Baumann, chief executive of Bayer, which is most famous for developing aspirin, said, “The combination of our two great organizations [will] deliver substantial value to shareholders, our customers, employees and society at large”.

But farmers and environmentalists warned the deal could lead to a reduction in seed variety, an increase in genetically modified crops and higher seed costs and therefore crop and food prices.

The proposed takeover is likely to face intense regulatory scrutiny in the US and Europe, particularly as it quickly follows two other mega-deals in the agriculture industry and would leave control of almost two-thirds of the world’s seeds and pesticides in the hands of three firms.

Analysts at Bernstein Research said they thought there was only a 50:50 chance of the deal winning regulatory clearance. “We believe political pushback to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes to dissatisfaction with Monsanto leaving the United States, could provide significant delays and complications,” they said in a research note. Because of the difficulties expected in getting the deal through, Bayer has agreed to pay Monsanto $2bn if the tie-up falls apart because of competition concerns.

Friends of the Earth described the takeover, which will see Bayer pay $128 per share – a 44% premium on Monsanto’s share price before the proposed deal was first revealed in May, as a “marriage made in hell”.

Adrian Bebb, Friends of the Earth’s food and farming campaigner, said the proposed takeover “threatens to further lock in industrialised agriculture at the expense of nature, farmers and the wider public” and warned that “this mega corporation will be doing its best to force damaging pesticides and GM seeds into our countryside”.

Campaigners promised further protests, which already have been held around the world since bayer made its first approach for Monsanto in May.

They are concerned that the deal could lead to Monsanto, which has described as “the most evil company in the world” for its role in developing deadly herbicide Agent Orange in the 1960s and more recently its role at the forefront of genetically engineered crops, could introduce GMO seeds in Europe.

Hugh Grant, Monsanto’s Scottish chief executive, hit out at environmentalist saying their concerns about GM crops “drives me a little bit nuts” and said they should be more worried about how to feed a fast growing global population whilst using less water as global temperatures rise.

“You think about two billion new citizens, you think about a warming planet. You think about water. These are appropriate conversations,” he said in an interview with CNN on Wednesday. “The thing that drives me a little bit nuts. The frustrating piece is this is such a polarized debate. And I don’t think it should be because we’re going to need all these kinds of agriculture.”

John Colley, professor of international business at Warwick Business School said, “Bayer’s acquisition of ‘Frankenstein’ crop producer Monsanto could be a horror story for both Bayer and its customers: the farmers.”

“Apart from Monsanto’s shareholders, who have hit the jackpot, this looks like a lose-lose bid. Bayer have been forced into paying too much and face major integration and competition authority risks.

“The farmers will lose out as product ranges are rationalised and attempts are made to increase prices.”

Bayer’s shares were up 1.3% to €105.60 in afternoon trading in Frankfurt, and Monsanto shares were 1.1% higher at $107.20 in New York.