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Bayer's acquisition of Monsanto "goes further" will reshape the global agrochemical industry pattern

Bayer's acquisition of Monsanto "goes further" will reshape the global agrochemical industry pattern

March 16, 2018

[China paint information] according to media reports, the Ministry of Commerce of China announced on the 13th that it has conditions to approve the plan of Bayer (), a German chemical giant, to acquire Monsanto (SE), the world's largest supplier of agricultural seeds and fertilizers

it is noteworthy that if the transaction is approved by the major national regulatory authorities around the world, the global agricultural fertilizer market will be reshaped, and finally a tripartite pattern of "Bayer + Monsanto", "CHEMCHINA + Syngenta" and "Dow + DuPont" will be formed. Industry insiders pointed out that the merged giant, with the reduction of technology research and development costs and the improvement of international voice, will usher in the recovery of the agrochemical industry

"six giants" become "three pillars"

as early as the end of September 2016, Bayer announced that it would acquire Monsanto. The original plan was destined to be completely different from the previous one, which used "Dow" as the stock symbol, and should be completed by the end of 2017. However, it was once stranded due to successive antitrust investigations in various regions

analysts pointed out that China's conditional approval marks that the transaction is getting closer and closer to completion. Bayer said at the end of February that more than half of the world's about 30 regulators had approved the acquisition

according to public information, Bayer's core businesses include healthcare and agriculture, of which agricultural business accounts for about 22%. If Monsanto is successfully acquired, the proportion of agricultural business in the new company's business will reach 40%

in order to pave the way for the successful acquisition of Monsanto, Bayer divested its original core business materials technology sector in 2015, renamed covestro (covestro), and listed separately; In 2017, it promised to sell some of its seed and herbicide businesses to BASF, a global chemical giant, to ease the EU's antitrust concerns about the acquisition of Monsanto. It is reported that the European Commission is expected to make a decision on the transaction on April 5

Bayer once explained that it was because crop science would be the rigid need for human survival in the next few decades. It predicts that there will be 9.7 billion people in the world in 2050. At that time, the food problem will become a great challenge to the global society. In addition, Bayer's market is mainly concentrated in Europe and Asia, and after the acquisition of Monsanto, it can strongly enter the U.S. market

according to the agreement, Bayer plans to acquire all the equity of Monsanto at $128 per share, with a total amount of about $63.5 billion. After the transaction is completed, Monsanto will become a wholly-owned subsidiary of Bayer

it is noteworthy that Bayer's acquisition of Monsanto is no less than the $130billion merger of peer competitors DuPont and Dow's, and the $43billion acquisition of Syngenta, the world's largest agrochemical giant, by CHEMCHINA. Morgan Stanley estimates that if Bayer can successfully acquire Monsanto, the combined company will occupy about 28% of the global pesticide market, about 36% of the U.S. corn seed market and 28% of the soybean seed market

in this regard, Galaxy Securities released a research report saying, "after the successful completion of the mergers and acquisitions of the three giants, the strategic pattern of the global seed industry and agrochemical industry will change significantly, and the concentration of the industry in the world will further improve. On the whole, the global agrochemical industry will form a three pronged trend of China, the United States and Germany."

or 3D systems company (nyse:ddd) announced the launch of new products, materials and functions on rapid + servo electromechanical servo driver TCT 2017 to drive the recovery of the agrochemical industry

industry insiders analyzed that the frequent mergers and acquisitions of global giants in the seed industry and agrochemical industry were mainly due to the industry downturn in recent years. The financial report shows that with the upstream impact of intensified competition for grain exports and the deterioration of the agricultural economic environment, agrochemical giants including Monsanto, Syngenta, DuPont, BASF, etc. have suffered losses in recent years

in addition, technological bottlenecks may also be one of the reasons for the successive strategic mergers and acquisitions of giants. Some analysts pointed out that at present, the yield of crops per mu has reached a high level, and there is an urgent need to integrate breeding and crop chemical business research and development, improve the scientific and technological level, and provide one-stop services at the same time

"from traditional agrochemical industry to seed industry, from traditional pesticides to environmental biological pesticides, from channels and R & D cooperation to cross-border agricultural information technology cooperation," industry insiders pointed out, "The international agrochemical giants quickly entered new fields through mergers and acquisitions, and their product lines were constantly enriched. The industry chain of Xi'an Zhongbang titanium biomaterials Co., Ltd. continued to expand, and finally realized the transformation from a single product and service to a comprehensive solution. Through the layout of the whole agrochemical industry chain, the giants improved the competitive advantage of the industry."

CSC also said that M & A is an inevitable move for the strong alliance of agrochemical giants to enhance their international competitiveness, which will further improve the bargaining power of leading companies in the agrochemical industry, optimize the competitive pattern of the agrochemical industry, and promote the stabilization and recovery of the prices of agrochemical products. Before the merger, the six giants controlled more than 60% of the global seed market and 75% of the agricultural chemicals market