Powerhouse Companies Integrate

September 27, 2018 01:02 PM
Bayer - Crop Science Division

After two long years of waiting, Bayer and Monsanto executives sit together at the table as one team. Until they finalized divestitures, the companies could not share business information as a condition of the Department of Justice requirements for the acquisition.

The $66 billion acquisition joins together Bayer’s chemical portfolio and Monsanto’s seed and trait engine. Bayer divested more than $7 billion in assets, including its row crop and vegetable seeds businesses, glufosinate business and certain glyphosate businesses, to gain access to Monsanto.

“[The full integration has] been a long time coming but one advantage [is] we’re extremely well-prepared,” says Liam Condon, president of the Bayer Crop Science division.

Since the two companies first struck a deal, Bayer promised the St. Louis-based Monsanto locations would stay intact—a promise Condon reiterated. In fact, the space is needed because Bayer’s new North American headquarters will be located there.

Bayer has claimed since the start of the acquisition it would improve crop technology for farmers. The company invests about 10% of its sales to research and development.

“Proforma [last year] would be about $2.8 billion for the combined company—far and away the biggest spend in the industry,” Condon says. “That’s why we’re so confident we can generate innovation faster.”

Combining seed and trait development with chemical discovery could lead to a more seamless, faster introduction of new technologies, according to Bayer. Still, farmers have expressed concerns about the acquisition and recent wave of consolidation because of the potential impact on input prices and competition in the short and long term.

However, Dean Cavey, a partner at Verdant Partners and an outsider to the deal, doesn’t believe these fears will materialize.

“An expanding world population combined with declining arable land means yields and productivity must improve,” he explains. “That must come through innovation, and that is costly. The combination of Bayer and Monsanto will allow more resources to be dedicated toward new innovative technologies and products. Second, we do not have significantly fewer participants in the space now—we have just moved around some of the assets. Just a couple of years ago the ‘Big 5’ consisted of Monsanto, Dow AgroSciences, DuPont, Syngenta and Bayer. Now we have Bayer, Corteva, Syngenta and BASF.”

Bayer Takes Over Glyphosate Lawsuits

In mid-August a California jury found Monsanto liable in a lawsuit filed by Dewayne Johnson, who alleged Roundup caused his cancer. The jury ordered Monsanto to pay $298 million, and with Monsanto out of the picture Bayer is taking over these lawsuits.

A recent statement from Bayer explains, “Bayer believes the jury’s decision is at odds with the weight of scientific evidence, decades of real-world experience and the conclusions of regulators around the world that all confirm glyphosate is safe and does not cause non-Hodgkin’s lymphoma.”

Bayer stated it believes the court will ultimately find glyphosate was not responsible for Johnson’s illness.
This trial was heard first because California expedites court processes for dying plaintiffs. There are thousands of suits against the company with claims the herbicide is connected to cancer.

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