Bayer and Monsanto Deal Gets Blessed
Since May of 2016, Bayer and Monsanto have been working on a deal to combine the two giants. Based on a report released by the Wall Street Journal on Monday, April 9, 2018, the U.S. Department of Justice has just given its blessing to combine the companies.
As a recap, Bayer AG is a German pharmaceuticals and life sciences corporation headquartered in Leverkusen, Germany. Bayer focuses on the pharmaceutical, consumer health, crop science, and animal health industries. Monsanto Co. is a U.S. company headquartered in St. Louis, MO and focuses on agricultural products such as seeds and tools to help farmers efficiently grow crops. Monsanto is well-known for its weed killer product, Roundup® and its production of genetically engineered crops.
In May of 2016, Bayer made an offer to buy Monsanto for over $60 billion. The European Union and the U.S. Department of Justice voiced concerns about a merged company with large market shares in these industries. However, after years of negotiating, both the European Union and the U.S. Department of Justice appear to be coming around to the idea of the two giants combining. In order to convince the European Union, Bayer agreed to sell more than $7 billion worth of its assets to BASF, including its seed and agro-chemical assets, such as its glufosinate weed killer, which is a competitor to Monsanto’s successful Roundup weed killer. The U.S. DOJ needed a little more persuasion, so Bayer agreed to sell additional assets to BASF relating to seeds, seed treatment, and digital agriculture.
In reaching the negotiated deals, the Bayer-Monsanto team indicate that the merger will benefit the global population because the two companies will be able to invest more money in global innovation. The companies are concerned that there will be 10 billion people to feed by 2050 and farmers will not be able to produce enough food without some serious innovation, innovation that the Bayer-Monsanto team can provide as a merged company. However, farmers are concerned that the Bayer-Monsanto merger will lead to increased prices and decreased quality due to the merged company owning a huge chunk of the seed markets. One report claims that a Bayer-Monsanto combination will own 77% of all seed corn, 69% of all seed traits, and 58-97% of the markets in cotton, soybeans, and canola.
Both of these companies have vast intellectual property portfolios, with Monsanto being the Assignee of over 4,000 granted and unexpired U.S. patents and Bayer being listed as the Assignee of over 6,000 granted and unexpired U.S. patents. Additionally, Monsanto and Bayer together appear to have more than 3500 registered U.S. trademarks. While some of the Bayer IP assets will likely go with the sale to BASF, the Bayer-Monsanto combined company will still be a large player in many industries.