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For many, Bayer stands for aspirin, the analgesic effect of the German company that was to become the most common way of referring to acid acetylsalicylic. But the giant chemical and pharmaceutical industry is much more.
On Tuesday, the procession of Bayer the largest manufacturer of seeds in the world, Monsanto, moved into a new phase.
The offer of the German company, which began talks with US in May, it increased to reach $ 65,000 million, US $ 127.50 per share, two dollars and a half more than in the previous offer .
If implemented, this will be the highest bid for a German company and overtake the US38.000 million paid by Daimler Chrysler in 1998.
But what what is the interest Bayer by acquire Monsanto?
A giant not only FARMAC Eutychus …
Bayer, based in Leverkusen, Germany, and more than 150 years of history it is defined as a company of “life sciences”.
It -according to data from the company- own more than 116,000 employees worldwide and sales of more than US $ 51,000 million a year.
And to achieve that volume, Bayer sells more than Aspirin .
The activities of the company from production and research of medicines to seeds, pesticides, fertilizers and genetic engineering.
49% of the business of the German company comes the medical sector. Of the rest, 26% corresponds to its specialized scientific materials -called Covestro- division and 22% of what the company calls crop science .
Interest in the agricultural business
In the latter area is where Bayer’s interest by the largest manufacturer of seeds in the world resides.
“The acquisition of Monsanto will be a great opportunity to create a global agricultural leader (…). This transaction will link the platforms and seed treatments, Crop Protection, Biology and Agrigultura digital. in particular, the combined business will benefit from the leadership of Monsanto’s seeds and treatments and product line crop protection Bayer (…) “noted the communique release issued by the company in May, when they started negotiations.
“This combination will be complementary from a geographical point of view to expand the already significant presence of Bayer in America as well as its position in Europe, Asia and the Pacific”, he added.
If you come to close the deal, almost half of the turnover of the new conglomerate which will be the largest agricultural supplier in the world is related to agriculture.
Changing Sector
In addition, the operation occurs in a context of reorganization of the sector.
In 2014, Monsanto, with a market capitalization of US $ 42,000 million- tried to buy his Swiss rival Syngenta.
However, the Swiss company ended up accepting an offer of US $ 43,000 million Chinese multinational ChemChina in February 2015.
After the failure of this operation, Monsanto dismissed 3,600 workers in a major internal restructuring.
The purchase of Monsanto by Bayer-of producirse- exceed the amount paid by Syngenta ChemChina.
A year earlier, another direct competitor to Bayer, the US Dow Chemical joined fellow US Du Pont to form a conglomerate of US $ 130,000 million.
“the reason for a union in the sector of seeds and agricultural chemicals is clear to Monsanto, after trying to take the lead several times, it is not surprising that now is the goal. the desire to Bayer for a quick purchase gives the impression that fears losing the train, “he noted in May Marcel Michelson economic journalist in Forbes magazine.
Giro Bayer
This operation involves a shift in the focus of Bayer .
“Monsanto is the perfect combination for our agricultural business,” said CEO of Bayer, Werner Baumann.
But this change in business orientation can, according to analysts, have a backlash among some shareholders who invested Bayer attracted by its activities in the medical and pharmaceutical sector.
While the agricultural division of Bayer produces seeds and pesticides, Monsanto is known especially for its genetically modified seed corn, soybeans, cotton , wheat and corn stalk.
Criticism Monsanto
An activity that has earned him much criticism by environmentalists and farmers, who criticize the effect of economic dependence that the use of GM seeds created in farmers as well as the potential risks to human health from the use of glyphosate, the herbicide depends largely on the commercial success of Monsanto.
These controversies damaged the image of Monsanto. The Bayer brand instead usually associated rse less the business of GM .
“(This movement) gives the impression that the giant Bayer can only find new avenues of growth through electroshocks . And it seems that there is a conflict between the reputation of Bayer in Europe and Monsanto, as the business in transgenic US company is not well seen by environmentalists and European green parties.
After the merger, some analysts speculate on the possibility Bayer decides to dispense with the name of Monsanto .
“Suffice it to say that Bayer has an excellent reputation and worldwide presence. We must take advantage of that, “
Werner Baumann said in an interview with the Frankfurter Allgemeine Sonntagszeitung German newspaper in May.
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