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A Significant Handshake

Bayer’s acquisition of Monsanto is great for shareholders but negative for farmers

Bayer

The $66 billion acquisition of Monsanto by Bayer is set to consolidate the hold of MNCs over the organised seeds & agrochemicals industry in India, constituting around 60% of the total industry. This is the third major global merger in the agricultural space after Dow Chemical-DuPont and ChemChina-Syngenta. The Indian arms of Monsanto and Bayer – Monsanto India and Bayer Cropscience – have a market capitalisation of Rs.4,220 crore & Rs.14,800 crore respectively. Investors certainly are enthused about the acquisition. On 14th September, when news filtered in suggesting the deal was about to be finalised, Bayer Cropscience closed at Rs.4,115, 1.3% higher than the previous close, while Monsanto India closed at Rs.2,571, a significant 10.3% higher than the previous day’s close.

The combined entity will enjoy synergies in India as the portfolios of the two companies are largely non-overlapping. Bayer is largely into agrochemicals, spanning herbicides, insecticides and fungicides. It derives only 12-15% of its revenue from its seeds business, largely from its hybrid rice seed varieties, and has launched pearl millet, cotton and mustard hybrids in FY16. Monsanto has 27 high-yielding maize hybrids under the Dekalb bra

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