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Bayer-Monsanto MegamergerGROUP 5
Introduction•German drug and pesticide manufacturer Bayer has agreed to purchase St. Louis-based seed and agrochemical giant Monsanto in a deal worth $66 billion•Bayer will become the world’s largest seed producer while controlling 25% or more of the world market for seed and pesticides.•Before it can be signed, the deal will face scrutiny by some 30 regulatory agencies scattered across the globe, including European and U.S. antitrust officials as well as the American Congress.•Bayer-Monsanto deal isn’t expected to close until the end of 2017
Reasons for MergerThe transaction caps a dramatic reshaping of the crop and seed industry. A year ago, the sector had at least a half-dozen global players. After Bayer and Monsanto tie up, creating a leader with $26 billion in combined revenue from agriculture, that number will shrink to just four.◦/On December 11, 2015, The Dow Chemical Company and E. I. du Pont de Nemours and Company announced that their boards of directors had unanimously approved a definitive agreement under which the companies would combine in an all-stock merger of equals. On February 3, 2016, Syngenta announced that China National Chemical Corporation had agreed to acquire Syngenta for $465.00 per share, plus the payment of a special dividend of 5 CHF per share.◦.htm#rom252304_22
MEGAMERGERThe joining of two large corporations typically involving billions of dollars in value.The megamerger creates one corporation that may maintain control over a large percentage of market share within its industry.
Pros of a MegamergerAdds more value to the combined entity than either individual company can produce on its own.-Reduces duplications and enhance overall revenue.It opens up new markets for both companies.-Gains new market share that either company alone had beforeIt is a cost-effective method to fuel expansion. -when businesses come together their specific needs can be met byone another in a more affordable manner; e.g. :employee resourcesCreate multiple growth opportunities. -More effective on a local level at providing economic benefits because there isn’t competition.
Cons of a MegamergerCan create distress within the employee base of each organization.