BERLIN, Germany (4th UPDATE) – German chemical giant Bayer said Monday (May 23) that he had handed over $62 billion to US agricultural organization Monsanto as he sought to create the world’s largest seeds, insecticides and GM crops.
In the largest purchase ever attempted through a German company, Bayer said it made an offer to the U. S. giant at $122 consistent with a constant percentage in cash, totaling $62 billion (55 billion euros).
The resolution poses a public relations threat to Bayer in Germany, where popular skepticism is highest over GMO crops and plant variety patents, and where controversy has arisen over threats of glyphosate fitness, a pesticide that Monsanto markets as Roundup.
Leverkusen-based Bayer promised that “the planned merger with Monsanto is an ordinary opportunity to create a world leader in the agricultural industry. Monsanto is one of the best companies compatible with our agricultural business. “
Bayer CEO Werner Baumann said the company “decisively addresses Monsanto’s reputation and demanding situations in Europe,” adding that “our logo represents accountability, transparency and openness. “
The German company said it expected synergies from the merger, the largest announced so far in the world this year, to increase annual profits by around $1. 5 billion after 3 years.
The announcement came a few days after Monsanto, based in St. Louis. Louis, Missouri, said he won an unsolicited offer from Bayer after weeks of hypothesis about a imaginable merger.
Monsanto said he “will not make additional comments until the Board of Directors completes its review” of the offer.
Bayer’s shares, which fell last week when the proposal was announced, fell another 5. 7% to 84. 42 euros on Monday in Frankfurt, partly due to investors’ fears that he would have presented too much to win Monsanto.
Mega-fusion
According to the Wall Street Journal, the two corporations in combination account for approximately 28% of global pesticide and herbicide sales.
Bayer’s CEO Baumann said the new mega-company could feed the world.
“The agricultural sector is at the heart of one of the most demanding situations of our time,” he told reporters. “How to feed another 3 billion people worldwide by 2050. “
Such a mega-broadcast may raise questions about the dominant position of the new undertaking on the market.
Bayer said in its report that it “is successful in working with the world government to unload mandatory regulatory approvals. “
The other threat is to damage the Bayer symbol if you swallow GM Monsanto’s giant, which has long been a red rag for environmental teams around the world.
Heike Moldenhauer of the German environmental organization BUND said glyphosate “should deter Bayer from swallowing a poisonous company” “like Monsanto. “
Sahra Wagenknecht, of the far-left Party Linke, said Bayer’s proposed acquisition of “the well-known genetics and corporate poison Array . . . it’s a public threat. “
And Anton Hofreiter of the Greens asked regulators to block the deal, accusing Bayer’s bosses that “Bayer’s bosses only maximize profits” and that the company is “the enemy of smallholder farmers. “
“The planned agreement would make the overall position even worse” by reducing competition, expanding pressure on farmers, bringing in more GMO crops, and generating “agribusiness waste,” he said.
‘Good fit’
Low commodity costs put more pressure on agricultural suppliers like Monsanto, which in March reduced its profit forecast for 2016.
The slowness of the sector has triggered consolidation agreements, such as a merger between DuPont and Dow Chemical.
Last year, Syngenta of Switzerland rejected an unsolicited offer from Monsanto, and then agreed to be purchased through China National Chemical Corp for $43 billion.
Last year, following Syngenta’s failed source, Monsanto embarked on a primary restructuring program, saying it would eliminate 3,600 jobs, or 16% of its, until 2018, end sites and asset cuts.
Bayer, which employs some 117,000 people, made a record profit and sales in 2015, recording a profit of 4. 1 billion euros on sales of 46. 3 billion euros.
Bayer said it was “premature at this stage” to estimate when the two corporations would combine into one, or what the potential workforce would be.
Peter Spengler, an analyst at DZ Bank Equity Research, said in a note that “from a strategic and regional perspective, Monsanto is an option” for Bayer.
“Bayer will be much more successful than it is today, but it will seize an exclusive opportunity in its life to be a dominant global leader in the agricultural market. “Marie Julien, AFP / Rappler. com