Published on : Mar 22, 2018
The wave of consolidation in the global agrochemical sector isn’t going to subside anytime soon. Starting with ChemChina takeover of Syngenta (May, 2017) and the merger of stalwarts Dow and Dupont (September 2017), the market is abuzz with soaring level of competition. The recent mega-merger deal has upped the ante higher and is poised to chart a new direction for the worldwide industry. On March 21, 2018 German multinational pharmaceutical giant Bayer AG seem to overcome a massive hurdle by securing European Union (EU) antitrust approval for buying American multinational agrochemical corporation Monsanto for US$62.5 billion. The green light by the EU will pave way for creation of a behemoth poised to control over a major chunk-over a quarter-of the worldwide seed and pesticides market, believe market strategists.
Mega Merger to open new Territories in Seeds, Pesticides, and Digital Agriculture
The merger deal is likely to unleash innovation in the overall sector, particularly in the segments of seeds, pesticides, and digital agriculture. According to European Commissioner for Competition, the organization has taken due caution to ensure a fair competition in the global agrochemical sector. In particular, it agreed to the deal only after Bayer agreed to sell an assortment of assets to boost its rival BASF.
Genetically modified seeds are widely shunned in Europe, but, they have widespread acceptance in the U.S. Various other countries have responded differently to the mega-merger deal. While, China has agreed in part, Brazil has already given a go-ahead. Of note, antitrust authorities in the U.S. and Russia are reviewing the takeover deal.
EU Carefully evaluating Repercussions of Tie-up on Farmers and Consumers in the U.S.
Despite intense campaigning and tens of thousands flooding the competition, the Commission has been treading carefully. Skeptics, especially numerous environmental and farming groups, contend that the trio of mergers will confer substantial clout to the companies in digital farming data, since algorithms may have an undue influence on the farming decision, starting from tilling to picking up crops. The commission thinks otherwise: farmers will have expanded options in the varieties of seed and pesticides, and at affordable prices.
Of note, German behemoth, has secured an agreement to sell assets pertaining to seeds and herbicides for $7.2 billion (5.9 billion euros) to BASF. In addition, it also agreed to divest its vegetable seeds business to the latter.