Close to a week after Monsanto revealed that its German rival Bayer had made an unsolicited takeover bid for the group, Bayer has now disclosed that it has made on offer of $62 billion to buy the American seeds company by offering $122 per share in cash.
The move meant to create a dominant force in the agricultural supply sector, comes as both Bayer and another German giant BASF have been mulling a tie up with Monsanto.
But the move has also triggered off an uproar among share holders in the market, and has raised a lot of concerns regarding the effects of a possible deal on the market.
Here’s what might be in store if Bayer manages to seal the deal.
- Supplying canola, corn, cotton, sorghum, soyabean, sugarbeet and wheat seeds to farmers, Monsanto holds a large market share of canola seed, and the new firm will control 70% market share in the canola seed business, realagriculture reported.
- The deal will also bring together two major players in a divided business, meaning that Bayer will gain control over a significant market-share in the corn and soybean business as well.
- With Liberty from Bayer and Roundup from Monsanto included in the same portfolio, Bayer will rise to dominance in the tolerant herbicide market, realagriculture reported.
- Bayer has a herbicide portfolio in the corn and soybean market, while Monsanto dominates in supplying seeds, a merger will put Bayer in a commanding position in the sector.
- The deal will mean that BASF from Germany will be the only competitor in the agricultural industry, standing alone against a tie up of two leading firms, Financial Times reported.
- The deal will also mean that Bayer will get Monsanto’s 4000 patents in the US and 7000 worldwide, the US patent database mentioned.
- Monsanto has been criticised for using legal tactics to enforce patents, and was also accused of playing a role in farmer suicides in India.
- The move has triggered a backlash from investors, as one of Bayer’s major shareholders described the bid as “arrogant empire building”.