According to analysts, the most likely scenario will be driven by the sale
of the profitable Searle subsidiary to another major pharmaceutical company
for about the current value of the whole company. This will require, as
well, the spin-off of the ag chemical and seed business for very little net
value, because this part of the business will be stuck with the billions in
debt from purchasing seed companies.
The amazing quote below -- in which a Deutsche Bank analyst asserts that
Monsanto's ag chemical and seed business is currently valued by Wall Street
"...at nothing..." -- suggests that the still substantial profits from
glyphosate sales and technology fees are expected to decline in the next
few years and do little more, in the near-term, than service the debt load
associated with Monsanto's seed industry purchases.
The story suggests Bayer as a logical partner, other stories have
suggested BASF. I think a more plausible merger is with either Novartis's
or AstraZeneca's ag chemical division. Both mergers will raise some
anti-trust issues, but these will be overcome with the sale of a few
products. Whether the Monsanto ag chemical-seed business goes with any one
or a combination of these companies, it will mean the loss of one of the
three major U.S. based pesticide -seed companies. Two will remain U.S.
based -- Dupont and Dow AgroSciences.
Once a deal is announced involving a merger of the Monsanto ag chem
division with one or more of the other major global players, the pressure
will grow on the remaining companies to "get with the program" and find
merger partners. Within 2 years, it seems likely that most remaining
pesticide companies/divisions will merge, in one way or another, with new
partners to form global businesses on the scale of Aventis; Dupont-Pioneer;
Novartis and ???; Monsanto and ???; Zeneca and ???
There are some interesting possibilities on the horizon -- Will a Japanese
based company make the plunge and buy one of the majors? Will a major
company emerge that is focused on biopesticides and non-GMO alternatives?
The restructuring of the pesticide-seed industry will almost certainly
occur so fast that no one will have time or the ability to project the
likely consequences on competition in major crop protection markets or on
the control of germ plasm and breeding priorities. Even when the last
major deal is completed, the pesticide-seed industry may not reach the
degree of concentration now common in several other high-tech industries.
Each merger will be built upon a multi-billion dollar bet on the
technologies and products that will shape agriculture in the decades ahead.
Clearly, the newly formed companies will articulate a business
plan/strategy that includes a pretty substantial repositioning of genetic
engineering. But if not GMOs, then what? And what will the consequences
be on farm income and profitability, food safety and consumers, and the
environment and sustainable agriculture systems?
Another intriguing question -- environmental activism, consumer pressure
and global market forces have clearly contributing to the undermining of
the economic performance of today's version of an ag biotech-based "life
science" corporation. But it remains to be seen whether and how these same
forces will find ways to act constructively by shaping alternative
corporate structures and strategies which will better meet the needs of
society, the environment and consumers. Many people have found personal
reasons to just say "no" to genetic engineering as recently relied upon in
shaping new agricultural technologies. But will consumers and activists
find a way to say "yes" to alternative approaches, technologies, and
business strategies in a clear enough way to influence how Wall Street uses
its enormous clout in financing this next, critical stage of corporate
evolution?
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Excerpt from front-page story in the UK Guardian --
"Monsanto pressured to sell off GM assets"
GM food: special report
Jane Martinson in New York
Friday October 22, 1999
"Robert Koort, industry analyst at Deutsche bank, said that Monsanto had
been
forced to look at selling part of its business as it was dragging down the
value of the entire company. "Monsanto might sell its agricultural chemicals
business as it is currently valued [by the stock market] at nothing," he
said.
Analysts believe the group's share price of just over $38 is a fair value
for
the business without the GM part. Shares in the group have plunged from a
high of $51 in May when Wall Street first realised the intensity of consumer
concern. "
For the full text of the article, see Ag BioTech InfoNet at --
<http://www.biotech-info.net/pressure.html>
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Charles Benbrook CU FQPA site www.ecologic-ipm.com
Benbrook Consulting Services Ag BioTech InfoNet www.biotech-info.net
5085 Upper Pack River Road IPM site www.pmac.net
Sandpoint, Idaho 83864
208-263-5236 (Voice) 208-263-7342 (Fax)
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