Monsanto becomes Bayer's property, which wipes out the name for image reasons. And agriculture is increasingly the domain of a few large corporations.
After more than two years of negotiations and manoeuvring, the day that will change the fortunes of global agriculture and agrochemicals has arrived. The day on which Bayer will be the sole shareholder of Monsanto. The official announcement was made by Bayer itself on 4 June, via a press release, after receiving the long-awaited green light from antitrust authorities, first in Europe and then in the United States.
Currently, taking into account Monsanto's debt, the deal is worth 63 billion euros. Never before in history had a German company completed a foreign acquisition of this size.
The question, especially for those outside the industry, is a fair one. How is it possible to finance a sum like this? As stated in Bayer's note, in the wake of the announcement the company immediately secured a bridge loan of 57 billion dollars, which had already been partially refinanced. As reported by Reuters, on 3 June it announced a capital increase, involving the issuance of 74.6 million new shares over the course of approximately two weeks. At a price of 81 euros each, the final sum exceeds 6 billion euros. The issuance was made possible by an agreement reached with twenty major banks and provides for a 22 per cent discount for existing shareholders. On the same occasion, Bayer added that it had planned the issuance of senior bonds totalling 20 billion euros.
Bayer had also pocketed several billion from the sale of Covestro, a producer of polymers and plastics, and from the divestments to Basf that were required by antitrust authorities to prevent the establishment of a monopoly on certain products.
The Monsanto chapter is, in fact, only the most significant within a process of radical transformation that the Leverkusen-based multinational has been undertaking for several years now. Little by little, the company has moved away from the polymers business, focusing on two major business areas: pharmaceuticals and agriculture. The latter effectively doubles following the acquisition of Monsanto, reaching a weight on a par with pharma.
According to projections drawn up by Bayer itself, a "Bayersanto" in 2017 would have had around 115,000 employees and would have achieved around 45 billion euros in pro forma sales. All this even taking into account all the activities divested to Basf.
The European Commission, the United States Department of Justice and other antitrust authorities in various countries around the world have ruled that, to guarantee competition, it is sufficient to require Bayer to divest certain business units. But from many quarters it is noted that the beneficiary was nonetheless Basf. That is, one of the global giants of chemistry, with a turnover of nearly 64.5 billion euros in 2017. "The growing concentration in the agrochemical sector is exacerbating a dangerous trend, in which a handful of multinationals are increasingly taking control of the future of agriculture and, therefore, of what we will eat," comments Federica Ferrario, head of the agriculture campaign at Greenpeace Italia.
Coldiretti echoes this, citing some figures that speak for themselves: "The mega-merger between Bayer and Monsanto means that currently 63 per cent of the seeds market and 75 per cent of the agrochemicals market are concentrated in the hands of just three multinationals, with an evident imbalance of bargaining power vis-à-vis farmers. One and a half billion agricultural producers worldwide are caught in a vice by a handful of large multinational groups that dictate market rules in the sale of the technical inputs needed for crop and livestock farming, starting with seeds, but also in the purchasing and marketing of agricultural and food products. The high level of concentration also puts at risk consumers' freedom of choice and quality and food safety standards, as well as the food sovereignty of individual countries and biodiversity".
"The company name will be Bayer. Monsanto will no longer be a brand. The acquired products will retain their trade names and will become part of the Bayer portfolio," reads the official statement from the German multinational. With a stroke of the pen, a name that has been at the centre of the most fierce protests by environmentalists is thus erased — activists who in the past even went so far as to establish a symbolic Monsanto International Tribunal, raising the spectre of a conviction for ecocide. A name that for very many people is synonymous with GMOs, glyphosate and seed patents, with all that this entails for farmers.
According to 24/7 Wall St., Monsanto ranks sixteenth on the list of the most hated American companies in the world. Bayer's chief executive Werner Baumann made no secret of this either, declaring at last year's shareholders' meeting that Monsanto's reputation represents "a great challenge." A challenge that has evidently been addressed by getting rid of a burdensome name, but not of all the controversies that made it so.
"Today, on the day that Bayer officially acquires Monsanto, it inherits its responsibilities," comments Ruchi Shroff, director of Navdanya International. Federica Ferrario of Greenpeace Italia is of the same view: "It is understandable that Bayer — after an acquisition that cost billions — would want to avoid being associated with Monsanto's negative image as well. However, this does not change the problems that will arise from this acquisition. The name under which a dangerous market power, controlled by a small number of ever-larger companies, presents itself is irrelevant to the farmers, consumers and environment that have to face its negative impacts."
