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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.

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    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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