Bad chemistry

Regulators stall Bayer-Monsanto megamerger

Fruit And Vegetable Seed Production Inside Monsanto Co. Seed Valley Greenhouses
It's a regulatory jungle out there. Source: Bloomberg

Agricultural and chemicals giant Bayer’s bid to buy the US seedmaker Monsanto was going so well.

First of all, financing proved smoother and less expensive than observers expected. The euro rise against the dollar since the deal was first announced in 2016 means Monsanto could cost €6 billion less than originally thought: The price tag will now be closer to €52 billion ($63 billion), rather than €58 billion. This means Bayer’s expected capital hike will be much smaller than once expected– probably €5 billion, in place of €12 billion.

And on Thursday, Bayer sold a further tranche of shares in Covestro, its spun-off material sciences division, raising €1.8 billion, and relieving Bayer of billions more in pension and other obligations. These and other sales may soon give the German company a net positive cash balance of around €5 billion.

But the smoothness of the financing contrasts sharply with the hurdles thrown up by regulators, which are considerably slowing progress and mean the deal may not be finalized until the middle of 2018. The initial target date has already passed.

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