Bayer to buy Monsanto for $128/share

There's skepticism that it will pass regulatory approval. Monsanto is currently overvalued when you don't consider the deal, so if the deal does not go through, there's going to be a significant drop in share price. Basically, investors buying in at the current share price believe the difference between current price and actual value is a good "gamble" that the deal goes through.

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

“We believe political pushback 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.

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https://business.financialpost.com/news/economy/bayer-wins-over-monsanto-with-improved-us66-billion-bid-but-regulatory-approval-remains-a-key-hurdle

BTW, I bought into Bayer about a month ago - https://www.tigerdroppings.com/rant/display.aspx?sp=64678714&s=2&p=64678714#64678714

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I wonder if the purchase will affect the expansion at the Luling facility? I have a couple million in electrical products slated for it.

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I would guess not, but you never know. Bayer may already have the capacity to produce dicamba at the level Monsanto needs or Bayer may be able to increase its production at a cost less than the cost to expand the Luling facility. I'm not even certain Bayer produces dicamba, but this site does list Bayer as a dicamba manufacturer ( https://www.sourcewatch.org/index.php/Dicamba).

I would assume they do, but they've been so focused on their Liberty herbicide, so you don't really think dicamba when you think of Bayer products... I'm a farmer and don't even know if they make it, but we haven't planted any dicamba tolerant seed, so I haven't learned all of the label names from each company yet. They'll all have their own name for it.

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How do you know these things. Your interests seem diverse...Nintendo, Monsanto...

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I just started trading at the beginning of this year. I got into Nintendo after just happening to come across an article about them and what they had on deck (new console, mobile games, etc..).

After I sold my Nitendo stock on the Pokemon run up, I started looking for the next company I wanted to buy into. Google Finance has a great stock screener where you can input all the variable or range of variables you're looking for and it gives you the stocks that match. Bayer met the qualifications I was looking for, so I did some research and it seemed like a good buy. I'm just learning as I go.

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prostyleoffensetime

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As a farmer, do you have any feelings about Bayer acquiring Monsanto, good or bad?

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I know that these break up fees are fairly common in acquisitions, but Bayer must be at least somewhat confident in their ability to make this happen...

They must be really interested in buy Monsanto since they have upped their offer considerably.

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Apparently there is a race in the agricultural/crop science industry to consolidate/merge among the companies, and no one wants to be the last man standing. Although that may be a large driving force, the Bayer/Monsanto combination does seem to make sense since Bayer Crop Science is mostly focused on crop protection products and Monsanto is focused mainly on seeds.

I speak strictly as a cotton, corn, and soybean farmer. That being said, it does make sense on the corn and soybean industries, because Bayer does have some great herbicides and pesticides, but the only thing appealing about their soybean seed is that it is tolerant to Liberty (herbicide produced by Bayer) and Monsanto seed is usually not.

Now, with Monsanto bringing dicamba tolerant seed to the market, people are going to be looking for a change from the Bayer seed because Liberty isn't just a great herbicide and a theme right now in agriculture is changing up chemistries when spraying weeds.

Makes sense for the corn industry because Bayer corn is nonexistent. I don't even know if they produce a corn hybrid, and Monsanto has a strong presence.

The only thing that's odd about it is cotton. The two biggest cotton companies in the south are Stoneville (Bayer) and Deltapine (Monsanto). They both have pros and cons, but really on our farm, we take different things into consideration when we plant Stoneville and Deltapine, so I guess it makes more sense than I thought. If they continue to keep those divisions separate, I think they'd do better because you have a lot a farmers that are loyal to one or the other.

All in all, I don't have a problem with it. I think the DuPont and Dow merger made more sense, but that's just my opinion. They combined two great chemical companies with one being a great grain company (DuPont) and the other a great cotton seed company and just a decent grain company with some seed technology tolerant to 2,4-D (Dow).

I guess the two biggest left that haven't merged now are BASF and Syngenta.

Interesting stuff. Thanks for the insight.

Industry expects Bayer to sell off all of their seed businesses that they presently own and Liberty herbicide will have to go. The main manufacturer of dicamba is BASF and they have an agreement in place with MONSANTO. The Luling project won't be effected. Biggest issue they have now is getting their formulation of dicamba approved by the EPA. The regular old dicamba formulations have no chance of being approved due to drift potential and volatization.