Fearing disaster after megabud from Bayer – OBI Online

Earlier today it was announced that German Bayer offer $ 122 per share, or 62 billion dollars for American Monsanto.

Cash Bid equals 515 billion and represents a premium of 37 percent compared to closing price on May 9.

– This is huge bids in several ways. Firstly bid it’s done that by a German company ever, and smashing Daimler’s acquisition of Chrysler for $ 38.6 billion in 1998, says professor and expert on giant mergers John Colley at Warwick Business School in a comment Hegnar.no received access to.

– Daimler Chrysler purchase was a total disaster, as major cultural conflicts poor integration ruined Chrysler’s profitability. The company was eventually sold for a fraction of the purchase price, he said.

– Get megabud succeed

According to Colley defies Bayer bid with what German businesses traditionally have done: to avoid megabud, favor of lower risk, but weaker organic growth.
– the bid is clearly designed to give Monsanto board little room for maneuver. The large cash bid does – despite Monsanto’s reluctance European ownership – that Americans put their own interest first if they refuse. Their shareholders will obviously not be satisfied, says Colley on.

Bayer shareholders will be even less pleased, as the shares have already fallen 10 percent – and fall further now that the size of the bid is known. The stock is down more than four percent on the Frankfurt Stock Exchange so far Monday.

Monsanto is up over seven per cent in pre-trading on Wall Street.

– It’s a classic transfer of assets from the buying to the selling shareholders. Get megabud succeed, and research shows that more than half destroys values, and only 25 percent deliver what they promise, says Colley.

Investigation waiting

The professor paints a picture of an agricultural sector in large changes, referring to ChemChina’s acquisition of Syngenta for $ 40 billion, and DuPont / Dow Chemicals merger where both parties will sell out their agricultural divisions separately.

– the consolidation comes in the wake of lower stock prices, as following a period of lower demand. This means that competition authorities will have much to do. Bayer / Monsanto will have large market shares in a number of markets, not least frømarkedene in the US, he said.

Colley points out that the US Justice Department will scrutinize the deal, which may well result in demands for action.

– Monsanto is regarded as having national importance, due to its expertise in genetic modification and position of the US agricultural markets. European competition authorities will undoubtedly have something to say, says Colley.