Bayer buys out Monsanto: "Marriage of the Ugly"...

The German chemical giant Bayer has just announced the purchase of the GMO pesticide and seed manufacturer, the American Monsanto, for the astronomical sum of 66 billion dollars. This announcement is the end of an arm wrestling match that has been going on for four months.

Update of the article published on August 21, 2016 in UP' Magazine.

Ahe fight which the two agrochemical giants, the American Monsanto and the German Bayer, have engaged in is set against a backdrop of major manoeuvres in a sector that affects the activity of hundreds of millions of farmers worldwide. In a hyper-competitive international context, the six mastodons of the sector - the Americans Monsanto, DuPont and Dow Chemical; the Germans Bayer and BASF; the Swiss Syngenta - are getting closer and are seeking to merge. The worst nightmare of environmental activists.
At the heart of this battlefield, a merciless battle had been fought between the Bayer group, known for producing the much-discredited neonicotinoid "bee-killer" pesticides, and Monsanto, the Saint Louis, Missouri-based GMO seed company, manufacturer of the herbicide Roundup and a bête noire for environmentalists. A multi-billion dollar battle, with Bayer proposing ultimatelywith a $66 billion bid the largest acquisition ever made by German industry, surpassing the previous record set when Daimler bought Chrysler for "only" $36 billion in the late 1990s.  

A story that smells like sulfur

The story of the two protagonist groups in this heavyweight battle smells of sulphur.
Monsanto, whose name alone gives hives to the wisest of environmentalists, has a rich history dating back to 1901. Among the controversial facts of arms of this agrochemical giant is that it "was the manufacturer of 'Agent Orange', the terrifying defoliant widely used during the Vietnam War between 1961 and 1971. The product was sprayed on crops during air raids to starve the population; in passing, the product contained dioxin, an agent contaminating millions of civilians. According to estimates from a study published in 2003 in the journal NatureThe total number of Vietnamese directly exposed to herbicides between 1961 and 1971 was between 2.1 and 4.8 million, to which must be added an unknown number of Cambodians, Laotians, American civilians and military personnel, and their various allies in Australia, Canada, New Zealand and South Korea.
Despite these eloquent figures, Monsanto has maintained for decades that its Agent Orange was safe. The same argument applies to another family of the company's products, PCBs (polychlorinated biphenyls or pyralenes), which are widely used in transformers in particular, and which were admitted to be highly toxic only in 1979 in the United States and 1987 in France. This component is still found today in our environment and particles remain in our bodies.
Another controversial product, Roundup is still making a lot of noise. Its detractors are unleashed and organize marches and legal actions to ban it. The main ingredient of this product, glyphosate, is suspected of being carcinogenic and the European Union has just postponed its decision on the renewal of the authorisation of this substance.

READ UP : Pesticide Battle: Low blows galore

These pesticides are only the tree that hides the forest; indeed, 70 % of Monsanto's turnover does not come from chemicals but from its seeds and its activity in the genetic manipulation of living things. The mere word GMO is enough to activate the association with the troubled activities of this giant which aims to put world agriculture under its control.
The German band doesn't have such a sultry reputation. It owes its rather positive image to its pharmaceutical products, foremost among which is the aspirin that the German invented in 1899. Yet Bayer is not a white dove. Together with the other German company BASF, the group is the heir to the IG Farben consortium, the supplier of Zyclon B, the gas that killed in the Nazi camps. Of its 46 billion euros turnover, 22 % are produced by seeds and pesticides. It is the manufacturer of the brands Gaucho and Proteus, neonicotinoid substances known to have deadly effects on bees in particular and wildlife in general.

READ UP : Battle of the neonicotinoids: bees will still have to wait

World agriculture in the spotlight

What is at stake in this battle of giants between Monsanto and Bayer is the stranglehold on the agricultural market. According to the NGO Greenpeace, a marriage between the American and German would create a world leader in transgenic seeds and pesticides, with 30 % and 24 % market shares respectively. Such dominance would inevitably lead to higher prices for farmers and, consequently, for consumers. American parliamentarians who would consider vetoing such a merger fear an increase in the price of soymilk, which is manufactured at more than 90 % by transgenic seeds. For the world's environmental organisations, the danger comes from the flooding of the European market, which has until now been relatively protected, with GMO products.

READ UP : These hidden GMOs that the industry wants to sneak in...

More generally, it is the enslavement of farmers to the products of these two giants that is feared. In this respect, the strategy of the merger is clear: to propose a complete offer to farmers, including seeds, fertilizers, advice, equipment and "climate services".
Already in 2013, the Saint Louis firm bought out The Climate Corporationa startup founded by Google alumni, specializing in ultra-localized agricultural risk analysis and the sale of related insurance policies.
Guy Kastler of the Confédération paysanne is concerned with Libération : " With such a "complete package", the farmer will be totally dependent on a single company. And these increasingly large multinationals will have even more leverage over governments to pass regulations that will force farmers to use their products. Look at the war they are already waging on farmers' seeds, which are now even more threatened by patents on "new breeding techniques", the new GMOs that companies dream of being able to sell without labelling. I see this as a threat to all citizens, because we risk losing our political sovereignty and our food independence.. "Arnaud Apoteker, former Greenpeace and GMO expert, says: " If these mergers in agrochemicals take place, the entire global agricultural system will be in the hands of three conglomerates able to impose agricultural policies based on GMO seeds and their associated pesticides ".

A perilous strategy

Bayer's CEO says he is aware that Monsanto is a controversial company. He says he states willing to meet with NGOs to address concerns about fear of price increases and reduced consumer choice. He promises environmental advocates strict adherence to ethical standards if Bayer succeeds in acquiring Monsanto. These fine words are not enough to calm people's minds. The management committee of a major investment fund, The Responsible FinancierThe Commission, in a decision of the European Court of Justice, stated in a statement : " Monsanto is a highly controversial company in the field of Corporate Social Responsibility, and faces many controversies both environmental, such as the Roundup affair, and social and societal (example: Bt transgenic cotton in India). La Financière Responsable therefore believes that it is not acceptable to have a company like Monsanto in SRI fund portfolios and will not reinvest in Bayer AG as long as it maintains this strategic orientation.. »
According to some expertsThe rapprochement between the two groups, if it takes place, will not be a sinecure. This is what Michel Nakhla from the Centre de Gestion Scientifique de Mines ParisTech thinks: " Here we are faced with a case where the energy that will be expended to make two corporate cultures compatible will inevitably result in a commercial erosion that will cause a majority of mergers to fail. In addition, however, the American and European competition authorities may wake up to prevent the birth of a group that would control nearly 37 % of the world agrochemicals market. They may also give the green light subject to the divestment of assets or the disinvestment of certain markets in order to avoid a dominant position. "
The two merged Bayer and Monsanto groups could be forced to divest part of their assets. For example, Bayer could fear a request for the divestment of its healthcare portfolio. This is despite the reassuring words of Werner Baumann, Bayer's chairman, who repeats that he would not divest the group's historical pharmaceutical activities such as aspirin. In this case, Bayer will have to draw a tight line between the sale of aspirin and the sale of plant protection products, a matter of consumer confidence.
Header image: photo of the film Over the Top, arm wrestlingby Menahem Golan (1987) with Sylvester Stallone 

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