There is great turmoil in the world of global agrochemical industry. German pharma-chemical giant Bayer has recently won over U.S. agro-biotech company Monsanto with a takeover offer of around $66 billion, ending months of negotiations after increasing its bid for a third time. And this acquisition, 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 agrochemical sector. Competitors including Dow Chemical, DuPont and Syngenta have all announced mergers recently, although some have yet to be cleared by regulators. And also the Canadian Potash and Agrium announced their all-stock merger last week after months of speculation.
Is it all done? No, it isn’t. The regulatory authorities are very vigilant and the impending mergers are facing intense regulatory scrutiny in different countries, as well as opposition from farmers groups. The main concern is that the mergers will increase the market power of suppliers in the already concentrated market for seed and agrochemical products.
For this reason, the planned $130 billion merger between Dow Chemical and DuPont isn’t a done deal. The merger is still going through regulatory review. The plan of the two companies is that after the slated completion of the deal at the end of 2016, the new big chemical company will then split up into three smaller and more-focused companies: specialty chemicals, advanced materials and agriculture.
ChemChina last September 6 extended by almost two months the deadline for Syngenta investors to tender their shares as the Chinese company seeks to complete a $43 billion takeover of the Swiss pesticides and seeds group.
“Investors in Basel-based Syngenta now have until November 8 to tender their shares unless this is further extended”, ChemChina said in a statement.
“All of the other terms and conditions of the tender offers remain unchanged and ChemChina continues to expect to conclude the transaction by the end of the year,” ChemChina said.
“The companies are awaiting some regulatory approvals for the deal and need to keep the tender offer open during this period”, a Syngenta spokeswoman said to Reuters.
The merger between Agrium and Potash would create the largest crop nutrient company in the world. The deal enables the companies to cut $500 million of their combined costs annually over the next few years to help them withstand some of the new market dynamics.
If regulator will approve the deal between Bayer and Monsanto, the German giant headquartered in Leverkusen would inherit Monsanto’s market-leading position in seeds and crop genes. That would move Bayer heavily toward agriculture in a long-range bet on high-tech crops to sustain a growing global population.
Through combined resources, the new company expects to provide growers with “a broad set of solutions to meet current and future needs, including enhanced solutions in seeds and traits, digital agriculture and crop protection”, Bayer said in a statement.
The combination also brings together both companies’ innovation capabilities and R&D technology platforms, with an annual pro-forma R&D budget of approximately €2.5 billion.
“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow. Together, Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers,” said Hugh Grant, Chairman and Chief Executive Officer of Monsanto.
We now expect the moves of Basf. The German chemical giant is monitoring antitrust concerns over planned tie-ups in the global agrochemical industry for potential acquisitions, the head of the company’s crop protection business said last September 6. “We are looking at antitrust issues to see if we can help,” Markus Heldt, president of Basf’s agricultural division, said of ongoing mergers and acquisition plans in the sector to The Wall Street Journal. Competition authorities could require companies to sell off parts of their portfolio to get the deals approved.
by Giorgio Zani