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Case Code: BSTR565
Case Length: 15 Pages 
Period: 2016-2018   
Pub Date: 2019
Teaching Note: Available
Price: Rs.400
Organization : Bayer AG
Industry :Agrochemical
Countries : Americas and Europe
Themes: Business Strategy/Merger & Acquisition
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
Technology
Operations
Economics
Leadership & Entrepreneurship

Bayer`s Acquisition of Monsanto

 
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EXCERPTS

ABOUT THE MONSANTO COMPANY

 

As of 2017, Monsanto was a leading creator and supplier of Genetically Modified (GM) seeds. The company was founded in 1901 by John Francis Queeny to produce saccharin, an artificial sweetener. In 1907, the United States Department of Agriculture (USDA) investigated the use of saccharin as a sugar replacement and found that it was violating the Pure Food & Drug Act, 1906. However, during World War I, due to the shortage of sugar, US authorities withdrew the restrictions on saccharin...

 
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THE DEAL

In 2014, the price of agricultural commodities worldwide had fallen by 20% due to excess supply and poor demand in the worldwide agriculture commodities market. This resulted in a fall in sales as well as in the margins of the overall industry. Experts stated that the Bayer-Monsanto deal was announced in an environment where the industry was already going through a consolidation (Refer to Exhibit XI for timeline of M&A activities in the pesticides and seed market). In addition to this, the controversies around GMO and cost reduction pressure also pushed Bayer into acquiring Monsanto..
 

CHALLENGES AHEAD

The negative image of Monsanto was one of the major challenges that Bayer would have to grapple with. Although Bayer had decided to drop Monsanto’s name as soon as the deal was completed, industry observers felt that just removing the Monsanto name without changing the products would not really help the company to allay customers’ apprehensions. Some experts stated that realizing anticipated synergies could be another challenge for the Bayer management...
 

EXHIBITS

Exhibit I:Bayer’s Business Segments
Exhibit II: Bayer’s Sales by Region in 2017
Exhibit III: Seed Sales of Leading Global Companies for FY16 and FY17
Exhibit IV: Agrochemical Sales of Leading Global Companies for 2016 and 2017
Exhibit V: Selected Items from the Income Statement of Bayer for the Period 2013-2017
Exhibit VI: Selected Information from the Balance Sheet of Bayer
Exhibit VII: Monsanto’s Sales by Segment in 2017
Exhibit VIII: Selected Items from Income Statements of Monsanto during 2015-2017
Exhibit IX: Selected Items from Balance Sheet of Monsanto
Exhibit X: Monsanto Sales by Geography in 2017
Exhibit XI: Timeline of M&A Activities in the Global Pesticides and Seed Market
Exhibit XII: Market Share of Leading Global Players in Pesticides and Seeds Markets in 2015 (Prior to Announced Dow-DuPont M&A)