Bayer to ditch Monsanto name after mega-merger

What you need to know:

  • At around 19.7 billion euros in 2017, Monsanto and Bayer's combined agriculture sales outweighed those of competitors ChemChina, DowDuPont and BASF, according to figures provided by Bayer
  • Bayer has put massive resources behind the deal, raising $57 billion in financing including a new share issue worth six billion euros announced Sunday

German chemicals and pharmaceuticals giant Bayer on Monday said it will discard the name Monsanto when it takes over the controversial US seeds and pesticides producer this week, as environmental groups kept up their criticism of the mega-merger.

The move comes after years of protests against Monsanto's activities by environmental groups that have badly damaged the company's brand.

But Bayer executives insisted that Monsanto practices rejected by environmentalists, including genetic modification of seeds and deployment of "crop protection" technologies like pesticides, were vital to help feed a growing world population.

"The company name is and will remain Bayer. Monsanto will no longer be a company name," chief executive Werner Baumann said.

Bayer's $63-billion (54-billion-euro) buyout of Monsanto -- one of the largest in German corporate history -- is set to close Thursday, birthing a global giant with 115,000 employees and revenues of some 45 billion euros.

The Monsanto brand "was an issue for some time for Monsanto management," noted Liam Condon, president of Bayer's crop science division, adding that the US firm's employees were "not fixated on the Monsanto brand" but "proud of what they've achieved".

Producing high-tech genetically modified seeds, many designed to grow crops resistant to its proprietary pesticides, Monsanto has been a target for environmentalist protests and lawsuits over harm to health and the environment for decades.

"It's understandable that Bayer wants to avoid having bought Monsanto's negative image with the billions it has spent on the firm," said Greenpeace campaigner Dirk Zimmermann, urging "a fundamental transformation in the new mega-company's policies."

He accused Bayer of having "no interest in developing future-proof, sustainable solutions for agriculture".

Weedkiller arms race

Activists fear Monsanto's addition to Bayer will further reduce competition in the hotly-contested agrichemical sector, limiting farmers' and consumers' choices beyond GM and chemically treated crops.

What's more, in recent years weeds have begun to emerge that are resistant to products like Monsanto staple glyphosate, marketed as Roundup alongside "Roundup-ready" seeds beginning in the 1990s.

As agrichemical firms respond with new pesticides and resistant seeds, there are fears of an arms race with ever-more-potent weedkillers.

Some scientists already suspect glyphosate causes cancer, with a 2015 World Health Organization study determining it was "probably carcinogenic" -- although Bayer has contested the research.

In 2017, attempts to block the European Union's five-year renewal of its approval for the weedkiller were unsuccessful.

But activists are lobbying governments and France has vowed to outlaw the substance within three years.

When launching the Monsanto takeover bid, Bayer also promised it would not introduce genetically modified crops in Europe.

But with the world population set to reach almost 10 billion people by 2050, Baumann argues Bayer's products and methods are needed to meet food demand.

"If Bayer wants to be rid of Monsanto's bad reputation, it should demonstrate that it's different," Friends of the Earth Germany genetic modification expert Heike Moldenhauer said.

"For example, Bayer could stop selling products containing glyphosate and end its lobbying to deregulate new genetic modification technologies."

Number one in seeds

Bayer has put massive resources behind the deal, raising $57 billion in financing including a new share issue worth six billion euros announced Sunday.

It will also sell large parts of its existing agrichemical and crop seeds business to BASF in concessions to competition authorities on both sides of the Atlantic.

Once the buyout and the sales to BASF are completed, Leverkusen-based Bayer's crop science business plus Monsanto will account for almost half its turnover, with most of the remainder coming from pharmaceuticals and over-the-counter health products.

At around 19.7 billion euros in 2017, Monsanto and Bayer's combined agriculture sales outweighed those of competitors ChemChina, DowDuPont and BASF, according to figures provided by Bayer.

"We estimate that Bayer will become number one in seeds and number two in crop protection globally" following the merger, analysts at Standard and Poor's wrote Monday.

Nevertheless, the ratings agency downgraded its score for Bayer's debt from "A-" to "BBB", while upgrading the outlook to "stable".