Bayer-Monsanto: The Challenges of a Mega Merger
(9 pages of text)
Case (Pub Mat)
In September 2016, German-based Bayer AG (Bayer) and U.S.-based Monsanto Company (Monsanto) agreed to merge entities to create a global leader in agriculture. The combined entity would benefit from Monsanto’s expertise in seeds and traits, and from Bayer’s wide range of crop protection products. Bayer would acquire Monsanto for $128 per share, a high 44 per cent premium in an all-cash transaction. There were issues with the deal, which included antitrust concerns, which could require subsequent divestments, and Monsanto’s brand image, owing to its involvement in controversial business operations. Given these issues, would Bayer’s diversification into agrochemicals by merging with Monsanto be able to create sufficient synergies and deliver economic benefits to shareholders, while meeting expectations from other stakeholders at different levels?
This case is intended for senior undergraduate and graduate-level business school students in courses on mergers and acquisitions, corporate finance, competitive strategies, industry analysis, business ethics, and stakeholder management. After completing the case, students should be able to do the following:
- Understand the challenges faced by companies diversifying and competing in high-tech consolidated industries that are subject to strong regulatory controls and highly involved with the sustainability of society.
- Analyze and give recommendations on how the merger deal during the due diligence phase and the post-merger integration could generate sufficient synergistic benefits for shareholders, while meeting the expectations of other stakeholders at different levels.
- Understand the ethical challenges and risks of oligarchy in the seed industry.
Agriculture, Forestry, Fishing and Hunting
Germany; United States, Large, 2016
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