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http://www.reuters.com/article/us-monsanto-m-a-bayer-deal-idUSKCN11K128
German drugs and crop chemicals company Bayer has won over U.S. seeds firm Monsanto with an improved takeover offer of $66 billion including debt, ending months of wrangling after increasing its bid for a third time. The $128 a share deal announced on Wednesday, up from Bayer's previous offer of $127.50 a share, is the biggest of the year so far and the largest cash bid on record.
The transaction will create a company commanding more than a quarter of the combined world market for seeds and pesticides in a fast-consolidating farm supplies industry. However, competition authorities are likely to scrutinize the tie-up closely, and some of Bayer's own shareholders have been critical of a takeover plan which they say is too expensive and risks neglecting the company's pharmaceutical business.
"Bayer's competitors are merging, so not doing this deal would mean having a competitive disadvantage," said Markus Manns, a fund manager at Union Investment, one of Bayer's top 12 investors, according to ThomsonReuters data.
(Score: 2) by EvilSS on Thursday September 15 2016, @04:13PM
These mergers are building on vertical integration in their markets. Monsanto's chemical business is weak these days, but their seed business is strong. Bayer is in the opposite position so combining them creates a company that is now strong in both areas. They are also have different levels of market penetration in different markets around the world. Combining the companies now means that it will be easier for one side to sell into markets where the other has a bigger presence. Plus they will be able to save on overall costs by reducing redundancies in the combined companies. All of this allows for growing their business revenues (and profits, and market cap). Today if you are a big, profitable company but with a stagnate stock price, you are painting a target on your back no matter how big you are.
It used to be that there was only room for 2 or 3 big companies in any industry or sector in a given city, but across states and countries there was room for others in that industry. Then it grew to where it was at the country level, but companies in other countries or regions of the world really didn't compete. Now for more and more industries we are at the point where competition is global, and we are seeing industries consolidate through mergers, buyouts, and attrition on a world wide scale. Welcome to the global economy.
(Score: 0) by Anonymous Coward on Thursday September 15 2016, @09:07PM
I understand the theoretical benefits you mentioned for merging, but if they didn't, would Monsanto be at any significant disadvantage with their seed business and Bayer with their chemical business, if they didn't merge. The fund manager's statement suggests that they are compelled to do this, but since they are separate industries, that isn't entirely clear to me that they are hurt by not merging. Upper management clearly makes out, but it isn't obvious that it is a business necessity.
(Score: 2) by EvilSS on Friday September 16 2016, @03:04PM
Because other companies in their sectors have, and it's easier to sell the whole stack to the end customers.
(Score: 2) by FatPhil on Thursday September 15 2016, @10:20PM
Anyway, do we have to drink when anyone says the word "merger"?
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