If Monsanto is Purchased by Bayer or BASF, What Are the Implications?

by

Opinion

In March, Monsanto CEO Hugh Grant stated that his global seed and trait company was going to focus on research and development instead of a agri-business mega merger. Even if that was his intent, the talk of a possible merger or acquisition didn’t go away for long. This week Reuters and Bloomberg have been aflutter with potential Monsanto acquisition rumours. What is different now is that Monsanto has moved from the purchaser to possibly being acquired by Bayer or BASF. So say it moves from the “internal discussion” stage to reality, what kind of impact would this have?

What if Bayer purchased Monsanto?

  • Significant market share of canola seed – the new company would hold roughly a 70% market share in the canola seed business as its divided currently.
  • Bayer would hold 95% of the canola trait business and significant pieces of the corn and soybean trait business as well.
  • Could open up InVigor canola varieties and Liberty trait to current Monsanto RR canola licensee companies or it could close the door.
  • Would make Bayer the dominant tolerant herbicide company with Liberty and Roundup in portfolio.
  • In corn and soybeans, the two businesses compliment each other  — Monsanto has seed and Bayer has a herbicide portfolio.

What if BASF purchased Monsanto?

  • At first glance it may be seen as less consolidation of market share since there is not much overlap directly in the farmers face.
  • Would consolidate a high majority of the global biological market. Since the Monsanto / Novozymes deal and BASF buying Becker Underwood, BASF and Monsanto hold the vast majority of the biological business globally.
  • The companies have shown success working together with tankmix offers for burn down.  BASF Canada and Monsanto Canada have teamed up to recommend tank-mixing Roundup Transorb HC or Roundup Ultra2 herbicide with Heat or Distinct herbicide.
  • BASF does not currently have a seed portfolio, so the acquisition of the Dekalb corn, canola, and soybean genetics would compliment the herbicide and fungicide portfolio BASF already holds.

Of course, either deal would be subject to regulatory approval, which might require further changes.

In both scenarios it would be a European company buying a US based company. The merging of cultures is always complicated in any business purchase and the situation is no different.

In either scenario, possibly the biggest impact would have nothing to do with farmers directly. If Monsanto is purchased, it would likely mean the end of the company’s name. Monsanto has been the target of anti-GMO protestors for years. How would the anti-ag technology rhetoric evolve if the Monsanto ‘bogeyman’ is stripped from the GMO conversation? How much anti-GMO ‘residue’ could Bayer or BASF acquire if they absorb Monsanto? Could the company that brought consumers Aspirin be vilified in the same manner as Monsanto? Only time will tell.

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