Bayer, Monsanto Discuss "Obvious Overlaps," Possible Divestments

September 14, 2016 11:32 AM
 
 

Bayer and Monsanto chief executives expressed confidence Wednesday their proposed merger will pass regulatory approval by the end of 2017 and win the support of farmers because they say it will bring greater innovation and solutions to agriculture than either company alone could achieve.

In the U.S., a merged Bayer/Monsanto entity would own nearly 37% of the market for corn seed and nearly 30% of the market for soybean seed.  The merged company would own nearly 31% of the combined crop-protection and seed market, according to Bloomberg, and a whopping 70% of the market for cottonseed, according to USDA figures.

 

 

Bayer and Monsanto estimate its combined sales will reach 23.1 billion euro ($25.92 billion) based on 2015 pro forma sales.

The proposed marriage is one of three large mergers currently pending in agriculture, including deals between Syngenta/ChemChina and Dow/DuPont. Should all three mergers pass regulatory approval, the three companies would dominate the seed market, with more than eight out of 10 corn seed purchases and seven out of 10 soybean seed purchases going through one of the three companies, according to research included in the Farm Journal 2016 Seed Guide.

Bayer would emerge as the world’s largest supplier of both seeds and farm chemicals, according to market analysts.

 “The unique aspect of this deal is that the overlaps are minimal,” Monsanto CEO Hugh Grant said at a press briefing on Wednesday. Grant and Bayer CEO Werner Baumann said the two companies’ portfolios are “complementary” in products and geography.

While Grant and Baumann admit there is some “obvious overlap,” they declined to provide further details about what products and segments of the businesses could need to be sold to win legal approval, saying that question will ultimately be answered by regulators.

Some industry experts have speculated for as long as the companies have been courting – since May 2016 – that regulators will force the merged entity to drop Bayer’s glufosinate (Liberty, LibertyLink) business, including the herbicide and seed traits tolerant to it because it is a direct competitor to Monsanto’s Roundup herbicide and Roundup Ready crops. There will likely be additional areas of overlap the company will also need to address.

“Cotton and vegetable seed space will be their biggest hurdle,” says Garrett Stoerger, partner at Verdant Partners, LLC, a transaction advisory firm in Champaign, Ill., earlier this summer concerning the possibility of a merger.

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Comments

 
Spell Check

Greg
Morris, IL
9/15/2016 08:34 AM
 

  Didn't we have to kick the Germans butts twice? Now we want them to own one of the biggest American Companies? Learn from our mistakes. Block the sale!

 
 
ray nitram
Lafayette area, IN
9/15/2016 10:44 AM
 

  Might this sale remove control of one of the greatest collections of food plant germplasm/genetics away from America and in to another country? I expect it would remain open for our use, but.... is it a wise strategic move for our nation? I don't know for sure, but now is the time to be asking!

 
 
Arthur
north west Indiana, IN
9/15/2016 11:25 AM
 

  I would say you can blame US corporate tax rates for this. we have the highest corporate tax rates in the world, in the end it comes out of the consumers pocket.

 
 

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