The nature of acquisitions requires a company to praise the object of its desire. One hears only of the opportunities for growth, synergy, innovation and, of course, a mutually beneficial future.
German chemical giant Bayer is no exception to this rule in its attempt to takeover U.S. seed and agrochemical company Monsanto, which Chief Executive Werner Baumann wants to buy for at least €55 billion, or $62 billion.
Now that the first offer has been rejected Mr. Baumann will have to up the ante. And financing the biggest acquisition in German corporate history doesn’t seem to be an insurmountable obstacle for him, even if Bayer’s stock price has taken a considerable hit since the bold plan was announced.
Yet Bayer seems so convinced of the industrial rationale of this deal that it appears to be overshadowing all other considerations. The takeover of Monsanto is being presented to the public as practically without alternative.
The fact remains that Monsanto has been the subject of more negative headlines than just about any other company around.
In terms of the business model, of course it makes sense for the biggest seed producer in the world to join forces with the second-largest producer of pesticides to create a new global market leader. And certainly Monsanto develops highly innovative products, like genetically modified corn that can grow in the dry climates of certain developing nations.
But that is only part of the story. The fact remains that Monsanto has been the subject of more negative headlines than just about any other company around. The lawsuits and demonstrations it provokes with regularity have given it the worst reputation of virtually any company worldwide. People associate many things with Monsanto – but confidence isn’t one of them.
Bayer’s management has underestimated just how problematic Monsanto’s notoriety would be. What’s more, the company has given no indication of how it intends to convince the German public that joining forces with a reviled company that specializes in genetic engineering is a good idea.
While genetic research and its almost unlimited possibilities may have broader acceptance in other countries, Europe only permitted the cultivation of genetically modified corn a few years ago, and after much debate Germany rejected it altogether.
Bayer doesn’t have to like German skepticism of genetic engineering, but it does have to expect it. Bayer would be wise to pursue an open and intensive social dialogue about the sensitive issues inherent in a takeover of Monsanto. But so far, it hasn’t made any serious attempts to do this. A few discussions with Berlin just before acquisition plans were announced certainly weren’t enough.
The Leverkusen-based company no doubt has a long and difficult communications campaign ahead if it wants to assuage Germans’ deep fears of genetically modified food and pesticides. And this must happen quickly, and not just with non-governmental organizations like Greenpeace, but with political parties too.
The debate within the governing right-left coalition about the pesticide glyphosate should serve as a warning for Bayer CEO Mr. Baumann that the company must adjust its public relations tactics.
The company slogan “Science for a better life” stands for Bayer’s successes in drug research, like turning Aspirin into a household name worldwide. But if the company wants to achieve similar heights with genetic technology and pesticides, it’s going to have to explain its goals. And not just to stakeholders, stockholders and politicians, but also its many thousands of employees and the public.
The takeover of Monsanto is about more than just industrial rationale – it’s also about attitudes and culture.
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