Post merger, the name will simply be Bayer as 'Monsanto' becomes history

Will make open offer to acquire shares in India

Bayer plans to complete the acquisition of Monsanto on June 7, following the receipt of all required approvals, in India and abroad, from regulatory authorities for the $63-billion combination of the two multinational companies. 

Globally, Bayer will remain the company name; all acquired products will retain their brand names and become part of the Bayer portfolio.

In this country, Bayer CropScience Ltd and Monsanto India Ltd are both listed on the stock exchanges. Bayer stated: “Both companies will continue to operate independently. The relevant bodies of both entities will review the best possible option on the integration.”

However, in a board meeting last Tuesday, Bayer CropScience decided to invest upto Rs 4 bn to acquire the shares of Monsanto through an open offer. 

Of late, Monsanto, the world’s largest maker of genetically modified (GM) seed, has been facing problems with some governments and with environmentalists. 

In India, it has decided to not introduce any new technologies in the GM segment or new varieties of cotton till issues with the government are resolved. All these have impacted the Monsanto brand value.

Including Monsanto and taking divestitures into account, the total research and development investment of Bayer in 2017 would have been around €5.7 bn. Of that, €2.4 bn would have been spent in the combined agricultural business.

Bayer had announced its intention to acquire Monsanto in May 2016 and signed an agreement with the US company for $128 per share in September 2016. Currently that corresponds to a total cost of about $63 billion taking into account Monsanto's debt outstanding as of February 28, 2018.

“Bayer will become the sole shareholder of Monsanto on June 7,” said Werner Baumann, Chairman of the board of management of Bayer AG in a statement.

According to the conditional approval from the United States Department of Justice, the integration of Monsanto into Bayer can take place as soon as the divestments to BASF have been completed. This is expected to be in approximately two months, he said.

“We have diligently prepared for the upcoming integration over the past two years. Our extensive experience in integrating other large companies has proven that we can and will be successful,” Baumann said.

Bayer will remain the company name. Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio.

“The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition. We will double the size of our agriculture business and create a leading innovation engine in agriculture...,” Baumann added.

Stating that the acquisition is anticipated to generate significant value, Bayer said it expects a positive contribution to core earnings per share starting in 2019.