Bayer's Monsanto acquisition to face politically charged scrutiny
* Bayer agrees $128 per share cash bid to buy Monsanto
* Merger "not a slam dunk"
* Changing political landscape could pose challenge
By Diane Bartz and Greg Roumeliotis
WASHINGTON D.C./NEW YORK, Sept 14 (Reuters) - As the global agricultural sector races to consolidate, Bayer AG's $66 billion all-cash deal to acquire Monsanto Co will test growing political and consumer unease in the United States and abroad over the future of food production.
Bayer's pesticide-focused agricultural business has few overlaps with Monsanto's dominant seed franchise, according to the companies' executives. Still, marrying two of the world's top farm suppliers, at a time when rivals are also merging, is fueling concern over fewer players competing in the $100 billion global market.
Monsanto and Bayer "have chosen to do a deal in the year of merging dangerously," said David Balto, a former policy director at the U.S. Federal Trade Commission. "They are in for a tough time."
U.S. Senate Judiciary Committee Chairman Chuck Grassley has called a hearing next Tuesday to scrutinize the wave of consolidation. Farmers in Iowa, the Republican senator's home state, are worried that seed and chemical costs are rising while a global glut of grain has pushed prices close to their lowest levels in years. Farm incomes have plunged.
Monsanto agreed to sell itself to Bayer for $128 per share in cash, yet its shares were hovering around $107 on Wednesday, reflecting the significant regulatory uncertainty surrounding the deal in the minds of investors. Bayer has agreed to pay Monsanto a $2 billion breakup fee if regulators thwart the deal. Continued...