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Bayer Monsanto

Following months of dealing, Monsanto Co. (:MONN/A) agreed Wednesday to sell itself to Bayer AG. The deal, pegged at $66 billion, including debt, would effectively erase from the playing field one of most successful and controversial U.S. agriculture companies of all time.

Pending regulatory approval, Bayer would add Monsanto’s huge seed and crop genes business, a move that would tilt Bayer much more toward agriculture than its current position as a pharmaceutical and chemical conglomerate.


A Sign Of American Farm Weakness

The sale of this American icon, founded in 1901, points to a U.S. farm economy that shows little sign of rebounding, even given anticipated record corn and soybean crops this year.

The decision to sell for $128 per share, which is below some analysts’ predictions of $135 per share, was seen by Monsanto as the company’s best choice. In an interview Monsanto CEO Hugh Grant said the board evaluated all options, including staying independent but ultimately landed on Bayer’s all-cash offer.

More M&A To Come?

Given the shaky state of agriculture in the U.S. along with layoffs at major farm implement makers like Caterpillar Inc. (NYSE:CATC) and Deere & Co. (NYSE:DC), it’s not surprising that talk in the sector has centered around consolidation.

Among plans already made public is an attempt by Dow Chemical Co. Stock not found DOW and DuPont Co. (:DDN/A) to merge. One pro-merger sign is the fact DuPont recently said it would resume salary increases and annual bonuses effective in Q4 for salary hikes and in 2017 for bonuses.

Additional Mergers In The Works

Bloomberg reported that Potash Corp. (:POTN/A) and Agrium Inc. (:AGUN/A) are in advanced M&A discussions. Billed as a merger of equals, Bloomberg however sees Potash as the buyer in this equation.

In addition, Bunge North America, the operating arm of Bunge Limited (NYSE:BGA) says it has agreed to secure controlling interest in Grupo Minsa, a Mexican producer of corn flour.


Who Is Next?

Investors and traders are madly searching for companies they think might be ripe for a little M&A action including CF Industries Holdings, Inc. (NYSE:CFC) and Mosaic Co. (NYSE:MOSC), both players in the agricultural chemicals space.

The current and potential future volume of M&A activity in agriculture is setting off alarms worldwide. Senator Chuck Grassley, formerly a farmer, now a lawmaker, has called for a congressional hearing to discuss the impact of mergers on the people who grow the food.

In June Grassley said, “Federal regulators need to thoroughly consider the implications [for] agriculture, farmers and consumers of such a seismic shift to this industry before they sign off on any transactions.”

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