Question

In 2016, Monsanto’s board accepted a $66 billion takeover offer from Bayer – Germany’s giant chemical and agricultural company. This takeover raises antitrust issues – creating one company with a large share of agricultural market for seeds and insecticides – that will require consideration by the U.S. government and the European Union. Discuss two or three of the key issues that Bayer's management considered in making this investment in the United States. Since the deal close Bayer's shares have lost $34 billion: was this a wise investment?

Answer 1

one of the major issue considered by Bayer"s Management is Antitrust laws. Through this takeover, Bayer becomes single company with large share of agriculture market, which will give Bayer some benefits of monopoly. this may alert the government and a legal action can be taken against the company.

But Monsanto is already an industry's leader in U.S. Also Bayer engage with pharmaceutical products as well. so the chances of retaliation by law in the form of antitrust laws is declined.

another important thing to be considered the increase in market for Bayer. after the takeover, not only Bayer get access of US market but it can expand market of seeds, earlier produced by Monsanto, to Europe.

Population of world is increasing day by day so demand of agricultural products is also increasing, which increases demand for Seeds and fertilizers. Through this aquisition, Bayer is able to provide more products in larger markets. Hence, it is a wise investment.