Wiboon Kittilaksanawong and Gabrielle Gaté wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com.
Copyright © 2017, Richard Ivey School of Business Foundation Version: 2017-12-15
The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional 3 billion people in the world by 2050 in an environmentally sustainable way.2 Liam Condon, member of the board of management and head of the Crop Science Division at Bayer AG
Genetic engineering has never been about saving the world; it’s about controlling the world.3 Vandana Shiva, Indian scholar, environmental activist, and anti-globalization author
In September 2016, Werner Baumann, chief executive officer (CEO) of German multinational Bayer AG (Bayer), and Hugh Grant, chairman and CEO of U.S.-based Monsanto Company (Monsanto), signed a merger agreement to create the world’s largest integrated pesticides and seeds company.4 The combined entity would benefit from Monsanto’s leadership in seeds and traits and from Bayer’s crop protection products across a wide range of indications in key regions worldwide. Bayer would acquire Monsanto for $1285 per share in an all-cash transaction, a premium price of 44 per cent based on Monsanto’s closing price on May 9, 2016, with a total value of $66 billion. The merger between the two giants would initiate a massive change within Bayer, and in the global agrochemical industry. Had Bayer made the right decision to diversify into agrochemicals by merging with Monsanto? In addition to the high acquisition premium with an all-cash transaction, there were antitrust concerns that could lead to subsequent divestments, and Monsanto had a negative brand image owing to its frequent involvement in controversial business operations. Would the merged entity, if approved, be able to create sufficient synergies that would actually deliver benefits to shareholders, while keeping its commitment to sustainable operations and addressing social and ethical responsibilities?6