Production Blog

LEVERKUSEN, Germany (DTN) -- Don't ask Liam Condon about the possible Bayer/Monsanto purchase. The head of Bayer's Crop Science Division can't tell -- not yet anyway.

Journalists from around the world flocked to Leverkusen, Germany, on September 7 for a press event called the Future of Farming Dialog 2016. Topics ranged from the use of satellites and digital farming to biologicals to Bayer's intentions to expand among other things, wheat hybridization efforts. Condon talked about the cyclical nature of agriculture and how innovation continues to be the key to helping farmers weather financial storms.

Still, the elephant in the room was Bayer's most recent $127.50 per share offer to purchase Monsanto. Combined, the two companies would account for $67 billion in annual sales and create one of the world's largest seed and crop-chemical company.

DTN and other journalists were warned prior to the press event that there would be no discussion about the pending offer. Monsanto has rejected several previous offers saying they were financially inadequate.

Condon apologized for his inability to discuss the possible merger while meeting with U.S. journalists, but indicated hopefulness there would be a time more details would be forthcoming. "It's tricky [to talk] right now. We are hopeful that we can have a stronger discussion at some point."

He didn't see the EU's notification last month that it has opened an in-depth antitrust probe of the planned merger of Dow Chemical and DuPont as a sticking point. It's likely the Bayer/Monsanto tie up would bring similar scrutiny, but Condon told DTN that regulatory authorities in several countries are likely to look over the transactions.

"Every authority will look at the question of whether competition is ensured or not and whether innovation is ensured or not and making sure there are no downsides to anything happening," Condon said. "That is a standard procedure everyone goes through. You make your case and the regulatory or anti-trust authorities make their decisions."

Lack of competition in the marketplace is a concern often mentioned by farmers. "At the end of the day, we are calling this our integrated approach," Condon said. "We can have an increase in productivity and development, which helps farmers increase yields and reduce their input footprint and ultimately increase their return to investment."

Condon specifically mentioned canola and cotton as examples of where Bayer has the whole package of product offerings -- seed, seed treatment, crop protection (fungicides, insecticide, herbicide) -- combined with agronomic advice, which the company sees as a compelling offering.

The industry has already consolidated to six major players, but Condon noted there is a second tier of more regional-type companies and generics that are strengthening in market presence. He also noted that two countries currently control the seed marketshares in the U.S. and that doesn't change with the new marriages being proposed.

Companies such as Syngenta and DuPont/Pioneer have tried integration strategies with differing levels of success. "When we talk about putting a package together, it has to be the best of all parts -- the best seed genetics, the best traits, the best crop protection package and the best agronomic advice. If you have that, it's very compatible," he said. Condon refused to comment on competitor portfolios, but he gave a generic observation: "I would argue they didn't have the best of all components." Key in that lineup is seed genetics, he added.

Condon also refused to talk about what areas might have to be spun off to avoid antitrust issues. "Right now, this is two companies talking," he said. "There is no official entity." Cotton, vegetable seeds and herbicide trait technologies are some obvious overlaps in Bayer and Monsanto's portfolios.

Dow Chemical Co. and DuPont Co. last year announced a merger that is still pending. Earlier this year, Chinese state-owned China National Chemical Corp. announced a $43 billion cash deal to acquire Syngenta AG, after a failed attempt by Monsanto to take over the Swiss agrochemicals group.

On Tuesday, Bayer's German competitor BASF said it was closely monitoring antitrust concerns over planned tie-ups in the global agrochemical industry for potential acquisitions.

Markus Heldt, president of BASF's Crop Protection division confirmed that attitude during the 2016 Global Press Conference on September 6 held in Ludwigshafen.

"The agrochemical market is evolving and we are actively pursuing opportunities arising from ongoing merger efforts to increase our footprint and value offer," Heldt said. "Because of our robust pipeline and potential additional acquisition opportunities either from divestments or from acquisitions, we think we are in a strong position to continue playing a significant role in the global ag chem market," Heldt said.

Pam Smith can be reached at pam.smith@dtn.com

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(CZ)

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