Russia pushes back on approval
Last month, Russia pushed back its deadline by three months to approve the Bayer-Monsanto (MON) proposed merger. According to Reuters, the Russian watchdog Federal Antimonopoly Service stated that the merger between Bayer and Monsanto would result in high concentration, which could be anti-competitive for the market. According to the same report, Russian agencies proposed that Bayer share its breeding technologies and provide access to its digital farming data.
Surpassing other players
In the above chart, the combined Bayer-Monsanto entity would surpass all other companies by pro forma sales of 23 billion euros. The ChemChina-Syngenta (SYT) deal is expected to have pro forma sales of 14.8 billion euros, and DowDuPont (DWDP) will have pro forma sales of 14.1 billion euros. The sixth company among the so-called Big Six is expected to have sales of 5.8 billion euros.
The bright side
The concerns covered in this series pose a challenge for when the Bayer-Monsanto merger could close. However, on the bright side, the combined company would be able to leverage its size and complementary competencies to bring new technologies to the agricultural market. Food safety is one of the biggest concerns for the ever-growing population, and both Bayer and Monsanto have been key to the agricultural market’s (XLB) growth along with players such as PotashCorp (POT), Syngenta (SYT), and Agrium (AGU).
You can find out more at Agricultural Fertilizer Industry: Your Comprehensive Overview.
As of December 6, 2017, the consensus analyst mean price target for Monsanto was $125.20, which is a 6.1% upside over the company’s current price. Although some analysts have a target price of $128, some are still doubtful about the merger’s success.