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Bayer Buys Monsanto

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The corporate logo of I.G. Farben.

The cor­po­rate logo of I.G. Far­ben.

COMMENT: Bay­er (a for­mer divi­sion of IG Far­ben) has pur­chased Mon­san­to. This fur­thers the fir­m’s goal of becom­ing dom­i­nant in the farm sup­plies indus­try, com­bin­ing its crop sci­ence busi­ness with Monsanto’s strength in seeds in a form of ver­ti­cal inte­gra­tion. This is con­sis­tent with Nazi strat­e­gy to devel­op dom­i­nant car­tels on the world stage with the Under­ground Reich com­pa­nies.

The deal was a cash takeover, the largest in his­to­ry. Not many com­pa­nies can do this.

In FTR #912, we not­ed Bor­mann cap­i­tal net­work-linked firms and their big moves into food pro­duc­tion. In addi­tion we reflect­ed on this against the back­ground that AIDS was delib­er­ate­ly man­u­fac­tured and con­sti­tutes the appli­ca­tion of genet­ic engi­neer­ing to bio­log­i­cal war­fare. (The CCr5 Delta 32 gene offers immu­ni­ty to infec­tion by HIV and is present only in pure-bred North­ern Euro­peans, aka “Aryans.”)

Will we see genet­i­cal­ly-engi­neered bina­ry pathogens intro­duced into the food sup­ply?

Note that there the deal does­n’t seem to make all that much sense from a nor­mal, com­mer­cial stand­point: ” . .Baad­er Hele­vea Equi­ty Research ana­lyst Jacob Thrane, with a ‘sell’ rat­ing on Bay­er, said the Ger­man com­pa­ny was pay­ing 16.1 times Mon­san­to’s fore­cast core earn­ings for 2017, more than the 15.5 times Chem­Chi­na agreed to pay for Swiss crop chem­i­cals firm Syn­gen­ta last year. He also said there was uncer­tain­ty over what the com­bined com­pa­ny would look like as reg­u­la­tors might demand asset sales. . . .”

It will be inter­est­ing to see if reg­u­la­tors force Bay­er to sell off some assets and, as we spec­u­lat­ed about in FTR #912, Bay­er’s for­mer IG Far­ben asso­ciate BASF acquires those assets.

This would keep the firms under the con­trol of the remark­able and dead­ly Bor­mann cap­i­tal net­work.

“Bay­er Clinch­es Mon­san­to with Improved $66 Bil­lion Bid” by Lud­wig Burg­er and Greg Roume­li­o­tis; Reuters; 9/15/2016.

Ger­man drug and crop chem­i­cal mak­er Bay­er clinched a $66 bil­lion takeover of U.S. seeds com­pa­ny Mon­san­to on Wednes­day, end­ing months of wran­gling with a third sweet­ened offer that marks the largest all-cash deal on record.

The $128-a-share deal, up from Bay­er’s pre­vi­ous offer of $127.50 a share, has emerged as the sig­na­ture deal in a con­sol­i­da­tion race that has roiled the agribusi­ness sec­tor in recent years, due to shift­ing weath­er pat­terns, intense com­pe­ti­tion in grain exports and a sour­ing glob­al farm econ­o­my.

“Bayer’s com­peti­tors are merg­ing, so not doing this deal would mean hav­ing a com­pet­i­tive dis­ad­van­tage,” said fund man­ag­er Markus Manns of Union Invest­ment, one of Bayer’s top 12 investors.

Grain prices are hov­er­ing near their low­est lev­els in years amid a glob­al sup­ply glut, and farm incomes have plunged.

But the pro­posed merg­er will like­ly face an intense and lengthy reg­u­la­to­ry process in the Unit­ed States, Cana­da, Brazil, the Euro­pean Union and else­where. Hugh Grant, Mon­san­to’s chief exec­u­tive, said Wednes­day the com­pa­nies will need to file in about 30 juris­dic­tions for the merg­er.

Com­pe­ti­tion author­i­ties are like­ly to scru­ti­nize the tie-up close­ly, and some of Bay­er’s own share­hold­ers have been high­ly crit­i­cal of a takeover that they say risks over­pay­ing and neglect­ing the com­pa­ny’s phar­ma­ceu­ti­cal busi­ness.

If the deal clos­es, it will cre­ate a com­pa­ny com­mand­ing more than a quar­ter of the com­bined world mar­ket for seeds and pes­ti­cides in the fast-con­sol­i­dat­ing farm sup­plies indus­try.

What the new­ly-formed com­pa­ny would be named is unclear.

Grant said on Wednes­day’s media con­fer­ence call that the future of the Mon­san­to brand has not yet been dis­cussed, but the world’s largest seed com­pa­ny is “flex­i­ble” about the name going for­ward.

The trans­ac­tion includes a $2‑billion break-up fee that Bay­er will pay to Mon­san­to should it fail to get reg­u­la­to­ry clear­ance. Bay­er expects the deal to close by the end of 2017.

The details con­firm what a source close to the mat­ter told Reuters ear­li­er.

Baad­er Hele­vea Equi­ty Research ana­lyst Jacob Thrane, with a “sell” rat­ing on Bay­er, said the Ger­man com­pa­ny was pay­ing 16.1 times Mon­san­to’s fore­cast core earn­ings for 2017, more than the 15.5 times Chem­Chi­na agreed to pay for Swiss crop chem­i­cals firm Syn­gen­ta last year. He also said there was uncer­tain­ty over what the com­bined com­pa­ny would look like as reg­u­la­tors might demand asset sales.

Bern­stein Research ana­lysts said on Tues­day they saw only a 50 per­cent chance of the deal win­ning reg­u­la­to­ry clear­ance, although they cit­ed a sur­vey among investors that put the like­li­hood at 70 per­cent on aver­age.

“We believe polit­i­cal push-back to this deal, rang­ing from farmer dis­sat­is­fac­tion with all their sup­pli­ers con­sol­i­dat­ing in the face of low farm net incomes to dis­sat­is­fac­tion with Mon­san­to leav­ing the Unit­ed States, could pro­vide sig­nif­i­cant delays and com­pli­ca­tions,” they wrote in a research note.

Bay­er said it was offer­ing a 44-per­cent pre­mi­um to Mon­san­to’s share price on May 9, the day before it made its first writ­ten pro­pos­al.

It plans to raise $19 bil­lion to help fund the deal by issu­ing con­vert­ible bonds and new shares to its exist­ing share­hold­ers, and said banks had also com­mit­ted to pro­vid­ing $57 bil­lion of bridge financ­ing.

Bay­er shares rose 0.3 per­cent to 93.55 euros. Mon­san­to’s were up 0.6 per­cent at $106.76.

ONE-STOP SHOP

Bay­er’s move to com­bine its crop chem­i­cals busi­ness, the world’s sec­ond-largest after Syn­gen­ta AG, with Mon­san­to’s indus­try-lead­ing seeds busi­ness, is the lat­est in a series of major agro­chem­i­cals tie-ups.

The Ger­man com­pa­ny is aim­ing to cre­ate a one-stop shop for seeds, crop chem­i­cals and com­put­er-aid­ed ser­vices to farm­ers.

That was also the idea behind Mon­san­to’s swoop on Syn­gen­ta last year, which the Swiss com­pa­ny fend­ed off, only to agree lat­er to a takeover by Chi­na’s state-owned Chem­Chi­na.

U.S. chem­i­cals giants Dow Chem­i­cal and DuPont plan to merge and lat­er spin off their respec­tive seeds and crop chem­i­cals oper­a­tions into a major agribusi­ness.

And on Mon­day, Cana­di­an fer­til­iz­er pro­duc­ers Potash Corp of Saskatchewan Inc and Agri­um Inc agreed to com­bine to nav­i­gate a severe indus­try slump, but the new com­pa­ny’s poten­tial pric­ing pow­er may attract tough reg­u­la­to­ry scruti­ny.

The Bay­er-Mon­san­to deal will be the largest ever involv­ing a Ger­man buy­er, beat­ing Daim­ler’s tie-up with Chrysler in 1998, which val­ued the U.S. car­mak­er at more than $40 bil­lion. It will also be the largest all-cash trans­ac­tion on record, ahead of brew­er InBev’s $60.4 bil­lion offer for Anheuser-Busch in 2008.

Bay­er said it expect­ed the deal to boost its core earn­ings per share in the first full year fol­low­ing com­ple­tion, and by a dou­ble-dig­it per­cent­age in the third year.

Bay­er and Mon­san­to were in talks to sound out ways to com­bine their busi­ness­es as ear­ly as March, which cul­mi­nat­ed in Bay­er’s ini­tial $122 per-share takeover pro­pos­al in May.

Antitrust experts have said reg­u­la­tors will like­ly demand the sale of some soy­beans, cot­ton and canola seed assets.

Bay­er said BofA Mer­rill Lynch, Cred­it Suisse, Gold­man Sachs, HSBC and JP Mor­gan had com­mit­ted to pro­vid­ing the bridge financ­ing.

BofA Mer­rill Lynch and Cred­it Suisse are act­ing as lead finan­cial advis­ers to Bay­er, with Roth­schild as an addi­tion­al advis­er. Bay­er’s legal advis­ers are Sul­li­van & Cromwell LLP and Allen & Overy LLP.

Mor­gan Stan­ley and Duc­era Part­ners are act­ing as finan­cial advis­ers to Mon­san­to, with Wachtell, Lip­ton, Rosen & Katz its legal advis­er.

 

 

Discussion

One comment for “Bayer Buys Monsanto”

  1. Slight­ly off-top­ic, but not THAT far off top­ic?

    http://www.zdnet.com/article/microsofts-new-datacenters-aim-to-put-customer-data-beyond-the-reach-of-us-snooping/

    Microsoft has start­ed offer­ing its Azure cloud ser­vices from two new Ger­man dat­a­cen­ters, which have been set up to make it much hard­er for US author­i­ties — and oth­ers — to demand access to the cus­tomer data stored there.

    Microsoft Cloud Ger­many is dif­fer­ent to the com­pa­ny’s exist­ing Euro­pean cloud ser­vices: the cus­tomer data in the dat­a­cen­ters is under the con­trol of a “data trustee”, T‑Systems Inter­na­tion­al, which is an inde­pen­dent Ger­man com­pa­ny and sub­sidiary of Deutsche Telekom.
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    Microsoft has fired the lat­est sal­vo in a case to keep US agents from hav­ing access to cus­tomer data stored over­seas.

    Read More

    Microsoft­’s cloud and enter­prise cor­po­rate vice pres­i­dent Takeshi Numo­to described the new dat­a­cen­ters as a “first-of-its-kind mod­el”.

    Microsoft can­not access data at the sites with­out the per­mis­sion of cus­tomers or the data trustee — and if per­mis­sion is grant­ed by the lat­ter, the com­pa­ny can only do so under its super­vi­sion. As a US com­pa­ny, there have been con­cerns that US law enforce­ment can request access to Microsoft cus­tomer data even if it’s stored out­side the US.

    Microsoft­’s new arrange­ment may go some way towards reduc­ing those con­cerns: accord­ing to the com­pa­ny, the new dat­a­cen­ters will increase oppor­tu­ni­ties for inno­va­tion “for high­ly reg­u­lat­ed part­ners and cus­tomers oper­at­ing in Ger­many, the Euro­pean Union and the Euro­pean Free Trade Asso­ci­a­tion”.

    Microsoft said the com­mer­cial cloud ser­vices in these dat­a­cen­ters adhere to Ger­man data-han­dling reg­u­la­tions and give cus­tomers addi­tion­al choic­es over how and where data is processed. When the ser­vice was announced late last year, Microsoft said that two dat­a­cen­ter regions in Ger­many would ensure busi­ness con­ti­nu­ity, with data exchange through a pri­vate net­work to ensure that data remained in Ger­many.

    “With Microsoft Cloud Ger­many, we will be able to use a cloud solu­tion that meets our com­pli­ance restric­tions and allows us to use inno­v­a­tive appli­ca­tions to improve our process­es,” said Dr Sebas­t­ian Saxe, CIO at Ham­burg Port Author­i­ty.

    Microsoft said it now has 30 Azure regions around the world. The avail­abil­i­ty of Azure in Ger­many will be fol­lowed by pre­views of Office 365 and Dynam­ics 365 lat­er this year, and the gen­er­al avail­abil­i­ty of Office 365 in the first quar­ter and Dynam­ics 365 in the first half of 2017. Ear­li­er this month Microsoft offi­cial­ly opened two new cloud regions in the UK, offer­ing Azure and Office 365 from mul­ti­ple dat­a­cen­ter loca­tions in the UK for the first time.

    Posted by CarobSteviaMatte | September 23, 2016, 1:45 pm

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