The closing of Bayer’s acquisition of Monsanto will take place Thursday, but the two companies will have to wait about two months before they can begin integrating their operations, Bayer said today.
The company’s name, which will take effect after that divestment, will be Bayer. Monsanto, which was founded in 1901 by John Francis Queeny, will no longer exist under that name, which was the maiden name of Queeny’s wife.
“We’re extremely proud of all we’ve accomplished as Monsanto, and are eager to continue to accelerate innovation in agriculture as we look forward to a future under Bayer,” Monsanto spokesperson Christi Dixon said.
She also clarified when the name change would occur. "There will be no branding changes at closing on Thursday," she said. "Monsanto will operate independently from Bayer for an interim period while Bayer completes the sale of some of its businesses to BASF. During this time, it will be business as usual for us, including our company name."
Asked about the name choice on a conference call with reporters today, Bayer Crop Science President Liam Condon said that based on brand audits the company has done around the world, “We simply had a strong belief that the Bayer brand has very strong positive recognition.”
The same, he said, could not be said about Monsanto’s corporate brand. He added, however, that “just changing a brand name doesn’t change anything, like reputation, overnight.”
“The Bayer cross is a global icon for trust and quality,” Condon said, noting that Monsanto has considered changing its name in the past and that Monsanto employees are proud of the company’s products and their relationships with their customers. “It’s less about the Monsanto brand,” he said.
Condon declined to discuss how many people might lose their jobs because of projected “synergies” that will be achieved by merging the two companies.
He said he could not discuss specific plans for personnel because Bayer will not have access to Monsanto’s confidential data until after the companies begin their integration process, which will start after final regulatory approvals are granted and Bayer has completed selling off assets to BASF.
The Justice Department approved the acquisition last week with certain conditions, including Bayer’s selling $9 billion in key assets to BASF. Bayer will sell its cotton, canola, soybean, and vegetable seed businesses, its Liberty brand of herbicides, its digital agriculture business and its Poncho/VOTiVO seed treatment franchise.
Condon did point out that the transaction is expected to result in annual synergies of $1.2 billion starting in 2022, with 80 percent of those savings coming on the cost side. Condon noted that the companies will save significant amounts on software licensing and consolidation of offices. “In every country in the world, we have two headquarters,” Condon said, calling it a “huge opportunity” to bring operations together in one place.
Bayer had already announced that it would be moving employees of its Crop Science division from Research Triangle Park, N.C., to St. Louis, where Monsanto has its headquarters. Condon said that process will probably take about a year.
But Condon said that “after we’re allowed to integrate, I would not expect any immediate short-term changes. We can afford to go a bit slower here as long as our customers don’t have a negative experience.”
“It’s important to ensure customer and business continuity,” he said.
The transaction is valued at $63 billion, Bayer said, based on the company’s offer to Monsanto of $128/share. “Bayer expects a positive contribution to core earnings per share starting in 2019,” the company said.
Asked what value the merger will have for farmers, Condon said, “This whole deal really only works if it’s also good for farmers, and that means it’s good for farmers’ profitability,” he said.
Condon also addressed criticism from groups such as the National Farmers Union and Organization for Competitive Markets, among others, who say the Bayer-Monsanto union and others recently approved – the DowDuPont merger and ChemChina’s acquisition of Syngenta – will result in less competition and higher input prices for farmers.
He pointed to the statement last week by the Justice Department’s Makan Delrahim, assistant attorney general for the antitrust division, explaining the reasons DOJ conditionally approved the sale.
“DOJ went out of its way to make sure all competition issues were addressed,” Condon said, adding that he believes there will be strong competition from BASF and FMC Corp., both of which are picking up numerous new assets because of the deal. New players with new technologies are also emerging, Condon said,
“Competition will remain very, very vigorous, and pricing to the customer won’t suffer,” Condon said.
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