Though some regulators have yet to weigh in, companies expect to close this year
The year 2017 ought to be big for the six large agribusinesses trying to merge. Each of the pending mega-mergers—Dow/DuPont, ChemChina/Syngenta and Bayer/Monsanto—are currently on track to close this year.
The Dow/DuPont deal is expected to be the first to emerge from the approval process. As early as the middle of March, European Union (EU) regulators could announce approval of the $130 billion deal. Although U.S. regulators have yet to approve it, the companies say they expect to close in the first half of this year.
The ChemChina/Syngenta deal is expected to pick up EU approval in April for their $43 billion merger. Company leaders behind the proposal between Bayer/Monsanto say they’re on track to close their $66 billion deal by year’s end. The Bayer/Monsanto proposal has cleared about one third of the 30 regulatory approvals it requires, company representatives say.
The proposed combinations, if approved by dozens of national regulating bodies around the world, would further consolidate the market for seeds and chemicals. While companies across the board are promising more innovation and speed to market, others fear higher prices for farmers.
In the marketplace for seeds alone, the breakdown would be as follows:
- Dow/DuPont would own nearly 41% of the market for corn seed and about 37% of the market for soybean seed, according to Farm Journal research. It would have 13% of the cottonseed market, USDA figures say.
- A Bayer/Monsanto combination would have nearly 37% of the corn seed market and nearly 30% of the market for soybean seed, according to Farm Journal research. They would own 58% of the cottonseed market.
- Syngenta has 5% of the market for corn seed and almost 10% of the market for soybean seed, according to the research.
Monsanto and Bayer said they will pair their chemical, data science and seed research businesses for simultaneous innovation. Instead of creating a herbicide chemistry and waiting years for the accompanying seed technology, the two could be released together.
Merger Mood in Washington
Though the timeline might slow down a bit, the agriculture industry’s major pending mergers will likely be approved this year, lobbyists for farm groups say.
Mary Kay Thatcher, senior director of congressional relations for the American Farm Bureau Federation (AFBF), and Zack Clark, congressional representative for the National Farmers Union (NFU), agreed recently that U.S. regulators will ultimately approve each deal.
“It looks like the [Department of Justice] is reviewing these in combination, rather than as single events,” which NFU believes is a positive, Clark said. NFU opposes the deals, claiming they’d stifle competition and drive up prices.
Thatcher, whose group is neutral, said a slight delay wouldn’t be unusual. “Every administration that comes in on all major issues says, wait until we get our political [appointees] in place and look at not just mergers, but trade and foreign policy, the whole ball of wax,” she said, also sounding a note of caution: “I think we should also be thinking about farm data,” she said. “Farmers’ data to be within even fewer companies, for me, is a concern.”