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Monsanto and Bayer Merger

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Monsanto and Bayer Merger

Monsanto and Bayer Merger

  Bayer has launched a $62bn bid for the US base Monsanto group, hoping to form the world’s largest seed and crop Chemicals Company. Bayer has valued Monsanto at some odd $128 per share. However, in market Monsanto’s shares have been trading at $ 102.67 at the time of making this video. This deal may […]

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Bayer has launched a $62bn bid for the US base Monsanto group, hoping to form the world’s largest seed and crop Chemicals Company. Bayer has valued Monsanto at some odd $128 per share. However, in market Monsanto’s shares have been trading at $ 102.67 at the time of making this video.

This deal may raise multiple Anti-trust (Competition) issue both in USA and EU. Further, this deal is also likely to raise concerns in other jurisdictions such as China and Brazil.

EU’s competition commission is likely to assess the deal independent of other market dynamics, on a first come first serve basis. Hence, merger of Dow-DuPont and ChemChina-Syngenta are least likely to affect their decision. Further, commission has also stated that political variables are least likely to affect the decision. However, the commission is worried about the seed price hike in EU due to the mergers.

In US when several deals arise simultaneously, the justice department normally looks “holistically” at the market consequences. If approving all would reduce competition, then staffers consider alternative scenarios involving one or more rejections or required spin-offs.

Farmers in the US are already starting to worry about the impact of reduced competition and choice. Crop prices have more than halved over the past three years, putting pressure on farm incomes, so they are particularly vulnerable to higher prices for inputs such as seeds. Reduced innovation is another major concerns for the US watch Dog. Prices of seeds are also likely to rise due to reduced competition in the market. Other mergers within the market are further cause of concerns!

 

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