5 ms·

Keep in mind that in today's global environment whenever a merger is proposed it has to go through alot of government scrutiny. Not just in the US, but also wi

Keep in mind that in today's global environment whenever a merger is proposed it has to go through alot of government scrutiny. Not just in the US, but also with the EU and China. 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.

mholmes680 10y ago
The ability to create seeds that can only be controlled by your own pesticides and/or medications could be interesting. and scary. Politics aside, can that be an antitrust issue? [edit: also, is this another "quiet" inversion also? US loses another business for tax purposes?]
- maxerickson 10y ago
  I would think that you would look at in in terms of the (for example) corn market rather than in terms of the Agglomerated Monster corn market. So the Agglomerated Monster corn would just be a product in the corn market, not a monopoly in the Agglomerated Monster corn market.
  - mason240 10y ago
    I googled "Agglomerated Monster corn" and came up with nothing. Is it a scare term for GMO?
    - maxerickson 10y ago
      It's just a made up name with a bit of a sardonic tone to it. But imagine how fun it would be if they spun out the new entity and named it "Agglomerated Monster Agricultural Products".
maxerickson 10y ago
The article says The tie-up, which will give the new company control of more than 25% of the world's supply of seeds and pesticides, comes amid a wave of mergers in the agriculture sector. 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.
- a_bonobo 10y ago
  Bayer CropScience is very small, just 2% of the global market, so them merging with Monsanto isn't really a massive game changer, which runs 23% [1]. I don't think it's going to shake up the market very much, could be that they even lose market share when the merged company consolidates its offerings. For example, Bayer's Liberty Link cotton is used when the local pests have become resistant to Monsanto's Glyphosate/Bt cotton, at some point Glyphosate/Bt sales will go down. 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
mtgx 10y ago
> The newly combined company will own the agricultural space, with a seeds and chemicals integrated vertical that would impress Apple. 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.
- helthanatos 10y ago
  If there wasn't a patent on everything under the sun, making it hard for other/ new companies to get into different spaces, it would be a good thing for prices, but considering how business today works, this isn't very good...
kesselvon 10y ago
Bayer does have a CropSciences division, so that might be up for grabs?

mholmes680 10y ago

The ability to create seeds that can only be controlled by your own pesticides and/or medications could be interesting. and scary. Politics aside, can that be an antitrust issue? [edit: also, is this another "quiet" inversion also? US loses another business for tax purposes?]

maxerickson 10y ago
I would think that you would look at in in terms of the (for example) corn market rather than in terms of the Agglomerated Monster corn market. So the Agglomerated Monster corn would just be a product in the corn market, not a monopoly in the Agglomerated Monster corn market.
- mason240 10y ago
  I googled "Agglomerated Monster corn" and came up with nothing. Is it a scare term for GMO?
  - maxerickson 10y ago
    It's just a made up name with a bit of a sardonic tone to it. But imagine how fun it would be if they spun out the new entity and named it "Agglomerated Monster Agricultural Products".

maxerickson 10y ago

The article says The tie-up, which will give the new company control of more than 25% of the world's supply of seeds and pesticides, comes amid a wave of mergers in the agriculture sector. 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.

a_bonobo 10y ago
Bayer CropScience is very small, just 2% of the global market, so them merging with Monsanto isn't really a massive game changer, which runs 23% [1]. I don't think it's going to shake up the market very much, could be that they even lose market share when the merged company consolidates its offerings. For example, Bayer's Liberty Link cotton is used when the local pests have become resistant to Monsanto's Glyphosate/Bt cotton, at some point Glyphosate/Bt sales will go down. 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

mtgx 10y ago

> The newly combined company will own the agricultural space, with a seeds and chemicals integrated vertical that would impress Apple. 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.

helthanatos 10y ago
If there wasn't a patent on everything under the sun, making it hard for other/ new companies to get into different spaces, it would be a good thing for prices, but considering how business today works, this isn't very good...

kesselvon 10y ago

Bayer does have a CropSciences division, so that might be up for grabs?