Germany's giant chemicals conglomerate, Bayer, has completed its takeover of US-based Monsanto. The Monsanto name, long touted by activists as a byword for corporate evil, will disappear. So now it's all good, right?
It's a rare day that we have a German corporation rather than an American or Chinese one that's getting its name in fat headlines on business news sites around the world. And this time it's because of good news in contrast to the recent past. German pharmaceutical and drugs company Bayer has completed its takeover of Monsanto, the US agrichemicals giant, for which Bayer paid €56 billion ($63 billion). It's the biggest takeover ever undertaken by a German company of a non-German company.
A hated brand disappears
The Monsanto brand has become almost a synonym for corporate evil amongst greenies, with its GMO crop plants (genetically modified organisms) tailor-made to tolerate the company's herbicide, glyphosate(sold under the trade name Roundup).
Bayer CEO Werner Baumann at the 2017 Annual General Meeting. The takeover of Monsanto has been Baumann's personal priority and contribution to the Leverkusen-based company
Bayer's takeover of Monsanto predictably generated cries of alarm and outrage by the usual critics of all things capitalist in general and genetic engineering in particular. All these terrible things taken together, they warned, are responsible for the suffering of farmers in developing countries. A monopoly is forming in agrochemicals and GMO crop species that will leave the farmers of the world with no real choices about how to grow their crops if they want to be profitable.
Bayer, the critics said, was taking over a corporate criminal of the first order in Monsanto, and the German company would taint its own corporate image in consequence. At every suitable opportunity, demonstrators gathered to hold up signs that said, in effect, "Monsanto = Evil."
The megamerger was, in short, a marvelous projection screen for all manner of anti-capitalist, anti-corporate, anti-agrichemical prejudices.
Now, it's fair to say that St. Louis, Missouri-based Monsanto did quite a lot to earn the hatred of its critics. Research results were manipulated or even falsified, and employees of regulatory agencies bribed, to obtain approvals for some of its products. A variety of scandals, lawsuits, and actual wrongdoings contributed to Monsanto's negative image. But so did those categorical prejudices.
In Germany, there is rampant fear of GMOs and of agrichemicals like glyphosate. Whence this fear derives is unclear, since scientists have tested the products that come onto the market and they've done their best to take away the public's fears — but with little success, since the fearful simply respond that "Monsanto has bought the scientists anyway," or words to that conspiracy-theoretical effect.
Monopoly over diversity?
The farmers are split in their opinion of Monsanto. Some find the combination of Roundup and "Roundup Ready" GMO crops perfect for their requirements, because they can use one-size-fits-all mechanized and industrial-chemicals-supported farming methods to grow crops regardless of the fine details of site conditions or local climate.
And some farmers see GMO crops as the Devil's handiwork.
So now Bayer is swallowing Monsanto, and the Monsanto brand will vanish, but Roundup and the corresponding Roundup Ready GMO seeds will remain — although Germany itelf is on the way to phasing out glyphosate. So will the class action suits US farmers have brought against Monsanto, claiming that Roundup causes health problems, and demanding compensation. If their lawsuits succeed, Bayer could face a serious problem.
As for that issue about a supposed "monopoly": After the merger, Bayer will control one-quarter of the global agrichemicals market. That isn't a monopoly. It will continue to compete with three other big firms that each have also resulted from previous mergers.
It's true that just a few years ago, there were seven big agrichemicals companies, and now there are only four. And yes, Bayer will be the single biggest supplier of seeds and crop protection chemicals in the world. But in 30 countries, government agencies charged with ensuring competitiveness of markets took a very close look at the Bayer-Monsanto merger, and they green-lighted it.
Many of them made specific demands before they would give approval, requiring Bayer to sell various business units to ensure competition continued in various market segments. Bayer submitted an estimated 40 million pages of documentation in Washington and Brussels alone, in connection with the merger, in the course of their quest to persuade antitrust agencies to let the deal go ahead.
A big promise
Now the deal is done, signed and sealed by corporate lawyers, quietly and without fanfare. There was no big party, no corporate chieftains mouthing twaddle about a "corporate marriage made in heaven." That shows Bayer is well aware how controversial this deal is.
"We will do justice to our responsibilities to farmers, consumers, and the environment," Bayer CEO Werner Baumann said a few days ago, and he promised transparency, too.
In coming days and weeks, the 117-year-old Monsanto brand will quickly disappear from the corporate letterheads and logos of the merged corporation. But how long will it take for the Monsanto brand to disappear from the minds of the public? A symbol of evil has been taken away from the army of Monsanto critics. Now it's up to Bayer's management to demonstrate that evil can be defeated.