BAYER plans to acquire MONSANTO and in turn become by far the largest agrochemicals company in the world, controlling important sections of the food supply chain. This would have serious repercussions for the global food supply. Farmers would have to pay more for pesticides and other consumables, and would also have a smaller selection of suppliers to choose from. The shrinking variety of crops would also mean that consumers would have fewer products to choose from in food stores. The transaction would also promote the industrialization of farming, and with it all the negative effects this would have for humans, animals and the environment. It is also feared that the transaction could lead to Bayer cutting jobs and paying less in taxes. As the Supervisory Board has approved the acquisition, its actions should not be ratified. Based on business figures for 2015, the agriculture divisions of BAYER and MONSANTO together would generate sales of US dollars 23.1 billion. No other company in the sector can compete with this. Taken together, BAYER and MONSANTO have a 25 percent share of the pesticides market and approximately a 30 percent market share in seeds for genetically modified and conventional field crops. Looking at genetically modified plants alone, the two companies together have a monopoly, controlling well over 90 percent of the market. However, the deal also entails other risks and side effects. “The merger will hurt farmers,” says Jim Benham of the INDIANA FARMERS UNION: “The more consolidation there is among the suppliers of our consumables, the worse it is for us.”
What’s more, the acquisition will reduce the variety of seed and pesticide products available. These kinds of oligopoly structures have already led to a huge slowdown in innovation and consolidation is likely to only worsen the situation. BAYER’s glufosinate and MONSANTO’s glyphosate have already been around for over 40 years. As a result, more and more weeds are becoming resistant to these substances. Farmers have no other choice than to increase the amount of poison they use. And BAYER is by no means denying this fact. “For over 25 years, the global crop protection industry has neither developed nor launched an economically significant herbicide with a new mechanism of action for broadacre crops – this is in part due to the consolidation of the industry, which has led to a considerable reduction in research spending on new herbicides,” says the BAYER researcher Dr. Hermann Stübler.
Consumers would also suffer as a result of the increasing consolidation of the agriculture market, as this would result in a smaller selection of food. And employees at MONSANTO and BAYER likewise will have to prepare for tougher times ahead. The Board of Management has estimated that the deal will leverage synergies of US dollar 1.5 billion and this will in part be driven by job cuts. Further job losses in the Group can be expected as a result of requirements set by the antitrust authorities: The Board of Management expects it will have to divest businesses totaling up to US dollar 2.5 billion. However, this conservative estimate could be exceeded. If that’s not enough, employees will experience more pressure as a result of the high level of debt that BAYER has taken on in relation to the MONSANTO acquisition. BAYER has only ruled out selling off business units at its German sites to extend its financial headroom. Employees will also be faced with cost-lowering savings programs as part of efficiency measures.
The cities and towns that are home to the sites will also have to brace themselves. They are still feeling the brunt of BAYER’s most recent “purchases”. Directly after the acquisition of MERCK’s consumer care business unit, BAYER announced that, “once the transaction is completed, it anticipates significant tax savings as of the first year.”
Despite all of these negative consequences associated with the MONSANTO acquisition, the Supervisory Board still approved the transaction and therefore failed to fulfill its responsibility. Its actions should therefore not be ratified.
I request notification of these countermotions and the reasons for them pursuant to Sections 125, 126 of the German Stock Corporation Act (AktG).