07
Sep
Bayer Increases Historic Takeover Bid For Monsanto
(Beyond Pesticides, September 7, 2016) Industry giant Bayer has increased its offer to acquire Monsanto to $65 billion, making it the largest all-cash takeover bid in history. Bayer is now offering $127.50 per share- up two percent from its earlier bid of $125. The pharmaceutical giant has been pursuing Monsanto in an attempt to become the world’s largest biotechnology and pesticide manufacturer. But many are concerned that should this merger be successful, farmers would have even fewer choices for acquiring seed, ensuring that the American food supply is dominated by a few mega-corporations.
According to The Guardian, Bayer’s proposal will create a global pharmaceutical and farm supplies giant, just as rival firms are also consolidating. ChemChina earlier this year offered to buy Switzerland’s Syngenta for $43bn, after the latter rejected takeover approaches from the St. Louis-based Monsanto. This ChemChina-Syngenta merger is all set to move forward after getting approval from the regulatory agency, Committee on Foreign Investment in the U.S. (CFIUS). U.S. firms Dow Chemical and DuPont are pursuing a $130bn merger, to be followed by a breakup into three businesses. Bayer’s previous offers for Monsanto were rejected, but Monsanto remains open to further discussion.
However, Monsanto has faced financial trouble recently. In June, Monsanto reported a 37 percent plunge in profit with farmers under increasing financial pressure due to falling commodity prices. The company’s revenue tumbled 8.5 percent to $4.19 billion, disappointing investors. Further, according to the Chicago Tribune, Monsanto agreed to pay an $80 million penalty under a settlement to resolve Securities and Exchange Commission allegations that it had not properly accounted for millions of dollars paid to distributors as Roundup rebates. That had the effect of distorting the company’s earnings reports for 2009, 2010 and 2011.
Additionally, acquiring Monsanto poses a reputational risk for Bayer, the 153-year-old German firm that built a global presence with the invention of aspirin. Monsanto has earned a bad reputation among environmental and public interests groups due to its flagship product, glyphosate (Roundup), which was recently classified by the World Health Organization as a “probable” carcinogen, and has been linked to other adverse human and environmental health impacts, and only given a last minute 18 month license extension in Europe this past June. Additionally, Monsanto’s controversial promotion (and manufacture) of genetically engineered (GE) crops has also earned the company scorn from many in Europe where GE crops and now glyphosate, are not well received.
Many warn that should this merger be successful there will be fewer options for farmers when it comes to accessing seeds. With little competition, the cost of seed, pesticides, and other farm supplies typically used in conventional farming systems could rise, leading to an increase in food prices for the consumer. While some argue that organic is too expensive, the simple fact is that chemical companies are able to externalize the social cost of their products in the form of eutrophication, soil erosion, harms to wildlife, health care costs to consumers, and numerous other adverse effects. Some researchers calculate the adverse impacts to health and the environment to be as much as $16.9 billion a year. (Tegtmeier and Duffy 2004) If consumers paid the true cost of chemical-intensive food production, prices for conventionally grown goods would certainly be more expensive than organic products, which are certified through a process that protects human health and the environment.
Good organic practices work to build the soil and maintain an ecological balance that makes chemical fertilizers and synthetic pesticides obsolete. Claims that organic agriculture cannot feed the world because of lower yields are contested by scientific studies showing that organic yields are comparable to conventional yields and require significantly lower inputs. Organic agriculture advocates say that it is not only necessary in order to eliminate the use of toxic chemicals, but to ensure the long-term sustainability of food production.
For further information, check out our webpages on Organic Agriculture.
Source: The Guardian, Chicago Tribune
All unattributed positions and opinions in this piece are those of Beyond Pesticides.
Mega-Mergers need to “Somehow” be Made Illegal.
September 14th, 2016 at 6:20 am