Bayer confirms $66bn Monsanto takeover
bbc.com
bbc.com
See the Haliburton/Baker Hughes merger that was blown up by the US government.
From a merger arbitrage perspective this has been a very interesting deal. This is the 4th proposal Bayer has made for Monsanto and with an all cash offer this might be enough, again assuming government approval.
They've went from an original offer of $122 to a final offer of $128/share. And the deal includes a breakup fee of $2 Billion for Monsanto if the deal falls through.
Monsanto has played this very well but the $128/share offer represents a 21% bump from yesterday's close, which is a bit concerning. With the other offers that have already been presented such a large premium means the market believes that there is a decent chance that this deal doesn't go through, now most likely due to government interference.
The typical remedy for governments who object to mergers is to have a company sell of a division or twp to show that the new company won't be a defacto monopoly.
Unfortunately in this case there is very little overlap between the two companies. This means that there isn't really anything for Bayer or Monsanto to sell off here.
The newly combined company will own the agricultural space, with a seeds and chemicals integrated vertical that would impress Apple.
I'm skeptical that there is any particular public benefit to allowing the merger, but it seems a bit exaggerated to talk about the new entity owning the market.
In other news, Syngenta (9% of seed market) was recently acquired by ChemChina but that deal is waiting for European authorities.
[1] Biased source: www.gmwatch.org/gm-firms/10558-the-worlds-top-ten-seed-companies-who-owns-nature
[edit: also, is this another "quiet" inversion also? US loses another business for tax purposes?]
But imagine how fun it would be if they spun out the new entity and named it "Agglomerated Monster Agricultural Products".
Is that supposed to sound like a good thing?
I can only imagine the power they will wield in future treaty negotiations against the existence of generic seeds on the market.
Now, I wonder if this was a plot. Maybe Bayer has favored these broadcasts to reduce the cost of takeover. Maybe Bayer is worst than Mosanto. Welcome paranoia.
I'm not sure that's a useful heuristic...
We all know Monsanto is not innocent of wrongdoing, but I'll bet 90% of what you read/hear about them is a complete misinterpretation or conspiracy theory.
http://www.cbc.ca/news/business/potash-agrium-merger-1.37579...
[0] https://en.wikipedia.org/wiki/2001%E2%80%9302_Bayer_04_Lever...
please explain, seems to me to be mostly about green politics.
Only one GMO (a bt corn I think) could be planted in the EU, and used mostly in Spain, though there's some hope the new rules will enable pro-GMO countries to plant many more in the future (approval process was generally stuck in the Council because enough countries opposed GMOs; now they can just ban them on their own territory w/o preventing pro-GMO countries from using it, and avoiding a conflict is politically attractive).
I personally see it as an ecological gain, due to productivity and so landuse improvements, something europe has basically stagnated at since these bans.
Sad to hear not much chance of improvements in the political sphere on that front..
Hmm.. here [1] it says that "three straight years of declining prices for major crops have pressured profits and forced companies to scale back staff and research."; Does that explain the pressure for mergers in this area?
[1] http://www.wsj.com/articles/chemchina-details-changes-to-str...
and that is supposedly because a glut in corn and soybeans is driving prices down;
http://www.journalgazette.net/news/us/High-corn-yield-hurts-...
for example the crash of 2008 was preceded by a long drought that caused a steep increase of food prices; also Arab countries were then unable to keep up food subsidies, so the Arab spring came and forced the governments out; Also the French revolution was preceded by a drought + the French state was basically bankrupt.
IMO, the IP legal structure surrounding Monsanto's activities is no different than a direct government subsidy to that company, and given its downright evil actions, I don't think most voters want to subsidize it.
0: https://www.sustainablebusiness.com/index.cfm/go/news.displa...
The most well know case is Monsanto Canada Inc v Schmeiser, but the facts do not support the farmer's claims of innocence. It's clear he tried to grow and acquire as many of Monsanto's seeds as he could.
The case you pointed to is about invalidating Monsanto's patents, or at least rendering them unenforceable. It's plainly just an attempt for farmers to save money by using Monsanto's seeds without paying for them and nothing about "victimisation".
What's wrong with that? If your patent passes on its genes onto my corn, then it's no longer exactly your plant.
Now that there are several big regulators involved (the EU, US, and China, mainly), that kind of thing could still scuttle deals, though, if the set of conditions becomes too big and conflicting. I'm pretty sure I recently ran across one such deal, that was approved but with conditions that investors balked at, effectively killing it, but googling isn't turning it up.
I could certainly see how the drug war could change following this in both good and bad ways, though I'm not sure they're connected enough that it should impact a potential merger?
/s
AGFA, Bayer, BASF, Sanofi all trace back to IG Farben.
Not unlikely that you personally are alive because of their contributions to medicine. Unlike say Coca Cola or McDonalds. But yes, at the same time IG Farben used slave labor in WW2, experimented on humans and had a subsidiary produce Zyklon B.
History is complicated.
[0] http://reformed-theology.org/html/books/wall_street/chapter_... (drawing on other sources)
[1] http://www.sfgate.com/opinion/article/Nazis-rode-to-war-on-G...
Heroin, basically a form of Morphine, has legit medical uses. Just like LSD and other fairly simple, potent molecules. Banning any R&D outright on them was a huge setback for medicine.
Sales Rep: "Oh, you mean you'd use more if it didn't do that... well I mean, I suppose... we could genetically engineer new crops so you could spray as much as you wanted without harming them"
Jethro: "We farmers are simple folk and we are environmentalist - so - I appreciate such a simple solution. We also need more gopher poison when you get a chance"
I worked on an avocado ranch (insert unnamed corporate sponsor here) in undergrad and I met a lot of "jethros" - there's a fraternity called AGR, I think that's where they trained them.
Even the guys with agribusiness degrees at cal poly were hicks, I used to drink beers on the job, etc. And I was in charge of killing the gophers, sometimes with horrible poison, sometimes with "rodex".
The day I quit, I said something about the entire field of agriculture not being interesting enough and I switched majors the next quarter.
http://www.ers.usda.gov/media/201431/eib24b_1_.pdf
A key para Ninety-eight percent of U.S. farms are family farms. The remaining 2 percent are nonfamily farms, which produce 15 percent of the value of agricultural output (fig. 4). Two features of family farms stand out. First, there are many small family farms (< $250,000 annual sales), making up 90 percent of all U.S. farms. Second, large-scale family farms account for 60 percent of all production.
So large closely held farms produce 60% of US output and smaller farms produce another 25% of US output.
http://www.ers.usda.gov/publications/eib-economic-informatio...
Farming is still an industry of family businesses. Ninety-nine percent of farms are family farms, and they account for 90 percent of farm production. Small farms make up 90 percent of the farm count and operate 46 percent of the Nation's farmland. Most farm production, however, occurs on midsize and large-scale family farms.
It's also worth asking the question, "Is the term 'family farm' meaningful in many of these cases?"
Farms have gotten larger as equipment has gotten larger and more effective. This isn't particularly shocking. But much of the consolidation has been individuals and families building up large farms over time.
It certainly appears that production will continue to concentrate under fewer and fewer operators, so the scary stories about the corporate takeover of farming can still come true.
The majority of our food comes from huge farms running huge machinery. Thousands and thousands of those huge farms are owned by small groups (there's a few million farms in the US, so even 1% of them is still a lot). Are those groups families? Some of the are, some of them aren't.
It is worth noting that my family/their farm qualifies some of them as 1%ers (bayfront house in Newport which has architectural significance, members of several country clubs, etc). Personally I have decided to forego 100% of my inheritance and let my sisters take it (I have no problem with being rich, but I do believe that having an inheritance hanging over your head is an innovation killer)
"Covestro is a spinout formed in the fall of 2015 from Bayer; it was formerly Bayer's $12.3 billion materials science division. "
Can't wait to see what "pharmaceutical" solutions they will bring up together!