Bayer in $66 billion bet that farmers will back linked-up supplies
By Ludwig Burger
FRANKFURT (Reuters) - Bayer's (BAYGn.DE: Quote) $66 billion purchase of Monsanto (MON.N: Quote) amounts to a long-term bet that farmers will grow to trust combinations of seeds and pesticides rather than continue to pick from ranges of separate products.
In the short term, the German drugs and chemicals firm hopes to benefit from a marketing and sales force that can promote combinations of the two groups' existing products.
But Bayer has said the main reason for buying the world's biggest seeds company is to develop entirely new product combinations, such as weed killers and crops that resist them.
Some farmers, though, are wary about a merger between two of the largest players in the agricultural supplies market, concerned they will have less choice and that product bundles will be expensive.
"They sell you the seed and their special herbicide. I was offered one deal of that (by Monsanto) and I turned it down because it locked me into one supplier," said North Dakota corn, soy and grain grower Justin Sherlock. "You can't find it from a different company."
The idea of integrating different farm products has been around for a while, but has a patchy record.
Switzerland's Syngenta (SYNN.S: Quote) has pursued it since 2011, with some success in emerging markets in Asia and South America, but less in the all-important North American market.
That depressed its share price to a point where it became a bid target - first for Monsanto and then, after that failed, ChemChina, which agreed a takeover deal last year. Continued...