Bayer
AG upped its bid for the third time and has a deal to buy Monsanto
for $66 billion.
The
combined company will have about 25 per cent of the world market for
seeds and will expand its hold on the pesticides market.
The
deal will, however, face some stiff opposition.
Bernstein
Research says “we
believe political pushback to this deal, ranging from farmer
dissatisfaction with all their suppliers consolidating in the face of
low farm net incomes to dissatisfaction with Monsanto leaving the
United States, could provide significant delays and complications.”
It
puts the chances of the deal receiving government clearances, even
with some divestitures, at only 50 per cent.
I expect the public to be clear losers in this deal.
Experience with other mergers in this general sector indicates there will be a reduction in research and development. That means less progress for farmers and the public.
Experience also indicates that the executives at the top will draw even more compensation, but those on the bottom less.
The combined company will also pay less taxes for many reasons, including being able to claim costs arising from the merger as business expenses.
It's yet another argument for cancelling all patents that apply to genes and technologies used in the development of new crop varieties.
