Nearly two years after Bayer’s acquisition of Monsanto was first announced, the financial part of the $63 billion merger was finally completed Thursday.
“Today’s closing represents an important milestone toward the vision of creating a leading agricultural company, supporting growers in their efforts to be more productive and sustainable for the benefit of our planet and consumers,” said Hugh Grant, outgoing chairman and CEO of Monsanto.
But amid a still-ongoing marathon to secure regulatory approval of the deal, Thursday’s closing simply marks Bayer’s purchase of the Creve Coeur-based agribusiness giant. Many details — including those about personnel changes and specific strategies of the new company — are still months away from any resolution, with other stages of the integration process yet to unfurl.
“Bayer will then become the sole shareholder of Monsanto,” said Liam Condon, head of Bayer’s crop science division, describing the close of the acquisition on a call with reporters earlier this week.
But it will still require more patience before Bayer, the German life sciences company, gets the keys to the Monsanto kingdom. Condon explained that information about the joint company’s future remained scarce because they must continue to operate independently for an approximately two-month period while Bayer sells off certain parts of its business to the chemical company BASF.
During that two-month window when the companies continue to operate as competitors, the Monsanto name — which will be dropped once the companies unite — will see its final days.
Only after that period lapses can Bayer finally peer under the hood at confidential information about Monsanto’s business operations. Condon said that access was needed before any changes could be assessed in earnest.
Even so, some comments have painted at least broad strokes of what to expect — particularly for Monsanto’s footprint in the St. Louis area. Monsanto has 5,400 full-time employees in the St. Louis area and 20,000 globally.
The St. Louis region will become Bayer’s North American headquarters and retain its presence as a leading hub of biotech research. Bayer’s crop science researchers, for instance, will join Monsanto’s research campus in Chesterfield after moving from their current home in North Carolina.
The timing of that move — and the precise scope of how many employees will come and go from St. Louis-area facilities — remains uncertain, with Condon saying that it “is going to take probably a year” to unfold.
“Some people will move immediately, some people will take longer,” Condon said. “This also depends on family situations — kids at school and whatever.”
And while it’s not yet clear what broader personnel changes might be in store, Condon did say that employment numbers would fluctuate in the short term.
“There will be some fluctuation, and there will be some changes in some jobs, but over time this is going to be an innovation engine and we’re going to have to be investing,” Condon said. “A lot of that investment is going to be in R&D in the U.S. And as the company grows, there’s also a need for supporting functions. ... So over time, my assumption is that there will be more employment, as opposed to less. But, for sure, there will be some impacts that we can only detail out after this initial two-month period.”
Looking ahead to when Bayer can finally review Monsanto’s internal metrics, Condon added that he “wouldn’t expect any kind of sudden people decisions in this year.”
Bayer has already identified an estimated $1.2 billion in “synergies” that it could realize from the merger within a four-year period. Of that figure, about $200 million stems from projected sales, while roughly $1 billion is tied to overlapping “infrastructural-type costs,” according to Condon.
Condon did not talk about potential overlap in terms of personnel, but cited separate real estate and licenses for IT systems as two significant areas where the companies could save money just by teaming up.
“There’s a huge opportunity to simply bring everything into one place,” he said.
Speculation about the company’s new look also extends to philanthropic circles in St. Louis, where Monsanto has long been a strong corporate presence in charitable giving. Condon, though, said that Bayer would maintain — and even expand — commitments to the community.
“We both feel highly committed to the communities in which we are based,” he said of the two companies. “That will continue, particularly now that the bigger footprint is going to be in St. Louis. Our ties in St. Louis are, if anything, going to be strengthened.”
Though most strongly associated with its lines of pharmaceutical products, Bayer has long touted its “complementary” fit with Monsanto’s fortes in seeds and traits, crop protection and its emerging work on digital tools for farmers. Bayer hopes that combining the two companies’ expertise will unlock innovation that helps address pressing issues in agriculture, ranging from environmental challenges to meeting the needs of the world’s snowballing population.
“This is where we felt the real juice in the deal is, by bringing this all together,” Condon said.
Since the deal was first announced in 2016, two of Monsanto’s marquee products — the weedkilling chemicals glyphosate and dicamba — have become the target of class action lawsuits. Glyphosate, the active ingredient in Roundup, faces allegations that it is a carcinogen — claims vehemently denied by Monsanto and at odds with recent findings from some government bodies, such as the Environmental Protection Agency. Dicamba, a decades-old herbicide being called upon to fight Roundup-resistant “superweeds,” is prone to off-target movement and has been blamed for damaging millions of acres of crops that aren’t engineered to tolerate the chemical. Bayer representatives would not comment on the controversy facing either product.
A main question surrounding the merger has centered on the impact that further consolidation in the agriculture industry could have on prices and competition.
“(Farmers) are concerned that the merger will result in higher seed prices, less innovation in seeds and chemicals, and fewer seed varieties,” stated a March report from the Konkurrenz Group, a law firm specializing on competition issues, based on survey results from about 1,000 farmers nationally. “Should the merger gain approval, they are apprehensive of the increasing pressure for chemically dependent farming. As the survey and other evidence show, farmers have not benefited from prior mergers that have concentrated the seed, trait, and pesticide business in the hands of five firms. Farmers today are squeezed by higher seed prices. The higher prices for new seed varieties have not been offset by increased productivity.”
Bayer, though, dismissed those concerns.
“This whole deal really only works if it’s also good for farmers, and that means that it also needs to be good for farmers’ profitability,” Condon said.
The close of the transaction Thursday marked the end of Grant’s 35-year tenure with Monsanto. Other Monsanto executives will leave at varying points in time, with Robb Fraley, the company’s chief technology officer, expected to stay on board for about six more months, according to a spokeswoman.
Given the recent expansion of Monsanto’s research facilities in Chesterfield, the offices at the company’s official headquarters in Creve Coeur may face the most uncertainty moving forward. Barry Glantz, the mayor of Creve Coeur, said the merger’s finalization felt like “sort of a sad day,” noting that Monsanto has been in the community since the 1950s and its 220-acre campus makes it the largest property owner in town.
“Change always makes people nervous — especially not knowing if there’s going to be change or if things are going to continue the way they are,” Glantz said.
“Fortunately the Creve Coeur economy and the St. Louis region’s economy are not beholden to one particular company and one particular industry,” he added. “That said, the plant science industry is very, very important to the city of Creve Coeur and Monsanto plays a huge role in that. ... I’m cautiously optimistic that Bayer is committed to that same trajectory.”