WashU Expert: Why Monsanto needed to accept the Bayer deal

St. Louis-based Monsanto has accepted a buyout deal from German pharma giant Bayer. What's next remains unclear.

Pharma giant Bayer has acquired St. Louis-based Monsanto. After months of negotiation, the German company went back to the bargaining table this week, and on Sept. 14 the seed firm’s board approved the $66 billion cash offer.


Radhakrishnan Gopalan, associate professor of finance at Washington University in St. Louis’ Olin Business School, said Monsanto had virtually no other choice.

“This is a great deal for Monsanto shareholders,” Gopalan said. “The board would have to be foolish to do anything other than accept the deal. The fact that it is all cash makes it very sweet.

“Given the other mergers in the space — Syngenta-ChemChina, Dow-Dupont — the regulatory risk is slightly enhanced, and so the increase in the fee in case of the deal falling through is also good news.”

Gopalan said that while it remains to be seen how Bayer will recover the investment of the acquisition, Monsanto’s position was much more clear.

“In terms of Monsanto, the company has been going through a restructuring the past year or so, and the internal morale is low,” Gopalan said. “They have problems with their product lines and future growth opportunity also appears to be bleak. So this is a great deal for them.

“For St. Louis, we can only hope that the consolidation does not result in too many local job losses.”

Gopalan is available for interviews and may be reached at gopalan@wustl.edu

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