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Monsanto/Bayer Merger?


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On Wednesday Bayer announced that it planned to buy Monsanto. Most of the basic coverage has only mentioned that Bayer is a pharma company and have neglected to mention that Bayer has a pretty substantial sized crop science division. Another thing that is getting a lot of attention is if Monsanto will keep its name, I know some on here get pretty worked up even just mentioning Monsanto, but  i think the bigger and more valuable name (imo) is Roundup Ready/dekalb. I don't think those names will be going anywhere. For me this potential merger raises 2 very big concerns and that is compition - this merger would take a huge amount of competition out of the canola seed market; and motivation for company profits over the affordability of production and consumption. Will this increase the cost of production to the point where producers look to other crops, possibly Camelina for even a small portion of their acres? Who knows there is a lot up in the air.

 

I'd like to know your thoughts/concerns on this proposed merger and any fall out from it being approved. Or just the general consolidation of the Ag input market.

 

For a bit of background this article does an okay job of setting up some of the hurdles this merger will face in getting approved and some of the pitfalls.

http://www.vox.com/2016/9/14/12916344/monsanto-bayer-merger

a couple key quotes for me are:

  • the new company would become the largest agribusiness on the planet, selling 29 percent of the world’s seeds and 24 percent of its pesticides.
  • Last year, Dow Chemical and Dupont agreed to combine their crop science divisions, and are waiting on US and EU regulators for approval. This year, the China National Chemical Corporation got the okay from US regulators to buy the Swiss seed company Syngenta in a $43 billion deal.
  • the three biggest companies that will emerge (Bayer-Monsanto, ChemChina-Syngenta, and DowDupont) will sell 59 percent of the world’s patented seeds and 64 percent of all pesticides.

 

Here is a list Bayer's crop science products available in Canada:

https://www.cropscience.bayer.ca/Products.aspx

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Wall St. is betting this deal won't get regulatory approval. The takeover price is $128 per share of Monsanto. It's an all cash deal with no Bayer stock involved.

 

Monsanto is currently trading at $103.62. If there was any confidence in this deal it would be trading in the mid 120's.

 

No worries for Monsanto though as the deal includes a $2 billion breakup fee. Deal doesn't go through they get $2 billion for their troubles.

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33 minutes ago, MJDDawg said:

Looking forward to the Genetically Modified Aspirin.

Already exists.  Genetically modified yeast grows aspirin in huge yields compared to other forms of creating the drug's active ingredient.  Although why anyone would think cheaper aspirin is bad is anyone's guess.

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This would be a big move,  I believe it's gone through now but will take approx a year before everything gets finalized. Sort of like the Dow deal last year. 


Without forcing Bayer to sell off some market share it would be a monopoly and prices would likely jump, but since canola is a world commodity so it would result farmers likely passing of the added cost onto the retailers,. 

 

but once it goes through Bayer will own 95% of the Canadian canola market (which is approx a $3 billion in industry)  Since Canada wont allow that much market share to be owned by one company, they will be forced to sell some off

 

BASF is likely just sitting in the back ground, just waiting for that to happen since they've been trying to get into seed in Canada for a while. 

 

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On 2016-09-16 at 0:09 PM, ForsbergTheGreat said:

This would be a big move,  I believe it's gone through now but will take approx a year before everything gets finalized. Sort of like the Dow deal last year. 


Without forcing Bayer to sell off some market share it would be a monopoly and prices would likely jump, but since canola is a world commodity so it would result farmers likely passing of the added cost onto the retailers,. 

 

but once it goes through Bayer will own 95% of the Canadian canola market (which is approx a $3 billion in industry)  Since Canada wont allow that much market share to be owned by one company, they will be forced to sell some off

 

BASF is likely just sitting in the back ground, just waiting for that to happen since they've been trying to get into seed in Canada for a while. 

 

It has to be approved by something like 30 regulators so it likely won't be approved as is.

 

I don't think that commodity prices would rise at the same rate as inputs if the canola seed market became basically a monopoly. 

 

BASF has clearfield canola, but I could see them picking up more of a market share from Invigor and Roundup Ready.

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