Bayer from Germany has struck a deal to buy Monsanto, the agricultural giant from the United States.
The $66 billion deal between Bayer and Monsanto has been approved by the Department of Justice in the US. The talk which began as early as September 2016 is being finalized currently in 2018. The meeting held between President Trump and the Bayer management set the deal in motion.
The agricultural sector is said to benefit from this deal. But farmers feel otherwise. They fear that such a merger would increase the cost price of seeds and chemicals, which would directly affect their farming production and costs.
It also means that prices will go up and agricultural products will become more costly for consumers.
The Bayer-Monsanto deal is one of the biggest on record by a German Company which is also an all-cash deal. The merger will make it one of the biggest agrichemical companies in the world, feels the CEO of Bayer, Werner Baumann. The company will be in charge of seeds and pesticides to almost a quarter of the world’s needs.
Feeding the people all over the world will be a big challenge to the company.
On antitrust concerns, Bayer will be selling some of its assets to BASF, a crop protection and chemical company in Germany, before the deal is made, as per the DOJ norms. Bayer will also have to put in $16 billion for R&D for six years.
Bayer will divest its seed business, which includes cotton, soybean and vegetable seeds and intellectual property. Intellectual property is crop yield maximization and new technology in farming through research and development which will be promoted through this divestiture.
Profits from farm products are falling down for many years from 2006 and touched a low of $61 billion in the year 2016.
Shares of Monsanto were slightly in the green with the news of the sell-off.