With $66 Billion, German Chemical Giant Bayer Buys Controversial US Agrochemical Giant Monsanto, Know About It In Detail

The Logical Indian

September 20th, 2016 / 10:27 AM

Source: theguardian reuters | Image Courtesy: takepart

In a rare deal, the German chemical conglomerate Bayer has agreed to buy the US based agrochemical industry, Monsanto with a whopping $66bn. If the deal is made, this will make for the world’s largest collaboration of a pesticide and seed company.


Who’s Who?
Bayer is a popular German crop and drug chemical maker who has a brand of healthcare product called Alka-Seltzer. Monsanto is a US based seed company which is popular for selling genetically modified seeds for crops. Monsanto has earlier made an attempt to open their market in Europe but received huge backlash from the environmental activists.

After months of bargaining, Monsanto Co., the US based GM seed industry agreed to sell and merge itself with the German based chemical giant Bayer AG. The $66bn deal would mark the beginning of an agricultural super-giant and consequently mark the end of one of the most successful and yet controversial companies in the US. If the deal is finalised, Bayer will inherit Monsanto’s autonomic position in producing crop genes and seeds in the US. As a result, Bayer will procure a winning position in producing high-tech crops in agriculture for supporting the growing population.


The Deal
The deal, a massive $128-a-share, is one of the biggest deals to be ever made in the league of agribusiness industries which has been foiled by increasing competition in exporting grains, change in the weather conditions and an unpleasant global farm economy.

Fund Manager Markus Manns of Union Investment who also happens to be one of the 12 investors of Bayer said to Bloomberg, “Bayer’s competitors are merging, so not doing this deal would mean having a competitive disadvantage,”. Vermont Senator Bernie Sanders stated a different thing, “The attempted takeover of Monsanto by Bayer is a threat to all Americans.”

The merger and acquisition will be finalised after a long regulatory process in places like Canada, US, Brazil, the EU and other places. The companies will have to file 30 jurisdictions for the merging to take place. After the deal finalises, it will form quarter or more than 25% of the world’s combined market on pesticides and seeds in the farm-supply industry.
The chief executive of Bayer, Werner Baumann stated that the merger will benefit the board and will garner profit for customers, employers, shareholders and overall, the society at large.


The Opposition
The takeover is most likely to face intense scrutiny in both Europe and the US. Although the environmentalists and the farmers have warned that once the deal closes, the prices of the food and the crop will skyrocket automatically. Concerned politicians, farmers, environmental activists and others have tagged this merger as “marriage made in hell”. Bernie Sanders added “These mergers boost the profits of huge corporations and leave Americans paying even higher prices. Not only should this merger be blocked, but the Department of Justice should reopen its investigation of Monsanto’s monopoly over the seed and chemical market.”


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