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What Bayer Is Saying About the Bayer-Monsanto Merger

Increased innovation and better products are the perks, say Bayer officials.

Increased innovation and a stronger product portfolio are two perks that will result if Bayer’s purchase of Monsanto becomes reality, say Bayer Crop Science officials.

“Farmers around the world will see a stronger product portfolio for seed, seed treatments, and products that control weeds, insects, and fungal diseases,” says Adrian Percy, global head of research and development for Bayer CropScience. “This will be made possible by highly complementary businesses.”

Also included in the mix is The Climate Corporation, Monsanto’s digital agriculture business.

Percy and other Bayer officials spoke at the firm’s AgVocacy Forum held before this week’s Commodity Classic in San Antonio, Texas. He adds that when combined, the annual research and development budget will be approximately 2.5 billion euros ($2.64 billon).

If the merger goes through, the new firm will have its global seeds and traits division in St. Louis. Meanwhile, its global crop protection and a divisional crop science headquarters will be in Monheim, Germany. It still will maintain an important presence in Durham, North Carolina, and other locations around the world. Plans are for The Climate Corporation to continue to be based in San Francisco.

Skepticism Abounds

In other circles, though, skepticism exists about the deal. Last year, Sen. Charles Grassley (R-IA) pressed the U.S. Department of Justice (DOJ) to scrutinize the Bayer-Monsanto deal. In a letter to the DOJ’s antitrust division, merger concerns Grassley expressed included:

• Vertical integration of traits, seed, and chemicals
• Increased barriers to entry in the market for smaller companies
• Fewer chemical and seed choices
• Higher prices for farmers and consumers
• Harm to research, development, and innovation

Percy, though, doesn’t see that happening. He sees increased innovation resulting from collaborations and partnerships they also are making with firms like Embrapa, Brazil’s agricultural research entity. Bayer is working with Embrapa to study the reasons soybean pathogenic fungi — such as those that cause Asian soybean rust—resist current fungicides. Teaming with such entities helps spur discoveries that would otherwise be difficult to do.

The same principle applies to the merger with Monsanto, with each firm’s current technologies complementing each other. “Growers will benefit from additional innovation in the marketplace,” says Percy.

David Hollinrake, vice president of North America Marketing for Bayer CropScience notes Monsanto has chemistry, but “we (Bayer) are really good in chemistry. We are pretty good in data, they are really good in data.”

Particularly beneficial to both parties is Monsanto’s subsidiary, The Climate Corporation. http://bit.ly/2mIVRRD

“Precision farming will equip farmers with better fact-based decisions,” says Hollinrake. “They can have data at their fingertips. Some farmers will say, ‘I have lots of data, we just don’t know how to unpack it.’ ” He says that tools from The Climate Corporation enable farmers to do just that.

Hollinrake says the marketplace will still have formidable competition, even if regulators approve mergers like DuPont and Dow and ChemChina and Syngenta.

“You have DuPont and Dow, Syngenta and ChemChina, ourselves and Monsanto, BASF, FMC, Valent, and other companies,” says Hollinrake. “There is a tremendous amount of competition.”

Commitments have also been made to broadly license technologies to other parties, he adds.

“We will have to work to earn the farmer’s business,” says Hollinrake. “If we don’t, someone else will.”

It is too early to speculate on any divestments that may occur due to the merger, Percy says. So far, Bayer has made about two thirds of the required regulatory submissions to U.S. regulators.

Bayer’s offer to Monsanto was for $128 per share. http://bit.ly/2lgXEQI Currently, Monsanto shares are bumping about 10% lower, evidenced by current share price of around $115 to 116 per share. That’s below the Bayer offer for Monsanto, but up from last December’s $104 to $105 range when the deal was announced.

If all goes as expected, the deal is slated to close at year’s end.

 

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