Bayer Acquisition of Monsanto
Roundup: a commonly used agrochemical
Bayer, the German conglomerate, acquired the Monsanto in 2018, for $63-66 billion (reported figures vary). The Monsanto name disappeared, along with its association with GMO crops (genetically modified organisms) and the glyphosate-based pesticide, Roundup.
Glyphosate sales continue to grow, and Bayer is building production capacity and sales and marketing synergies in India, whose agrochemical market is expected to double by 2025.Bayer has a strong product portfolio in crop sciences: seeds, protection, nutrient supplements, mosquito control, and soil health. Monsanto adds r&d skills, digital farming, and production capacity.And Roundup.
Within a few months of the merger, Bayer lost almost 30% of its market capitalization as a direct result of a Northern California jury awarding damages for $2 billion to a couple who had used the pesticide. While that was reduced to $87 million, there are now thousands of cases against Roundup, mostly in the US. Estimates are as high as 40,000 in total. While EPA declared Roundup as “safe,” public opinion has been strongly against Monsanto, for fears of the unknown risks and its poor public relations, lack of control of the diffusion of GMO and Roundup crops across the environment, and its often ruthless prosecution of farmers for violating its strict contract rules.
Whether those are fair criticisms or ungrounded anti-science is a matter for the courts. In late February, Bayer switched its strategy from being expected to settle a major suit for $10 billion to a position that they’re not ready and will consider options.
Glyphosate is widely used in many tea growing nations. When it was banned in Sri Lanka, the industry was crippled by weed-choked fields and resulting crop losses. Imposed in 2015, the ban was lifted in 2018. In India, there are around 70 competing brands.
It seems fairly certain that there will be no resolution of the Roundup debate anytime soon. That means more courts cases and legislative and regulatory moves to restrict or ban it. In the other direction, there will be increases in demand, and climate change may well accelerate that growth, as insects and weeds get out of control through shifts in precipitation patterns and extremes of rain and drought.