Investors Breathe Fire Over Bayer’s Bid For Monsanto, Calling it ‘Arrogant Empire Building’

Some investors are upset over the prospect that that birds at Monsanto might fleece Bayer of its aspirin money. The gist of the beef stems from the indelible fact that Bayer’s stock price had already been sucking dick before the MONster bid. Now that the bid has been proposed, all pandemonium has broken loose, shattering the books of many European investors, crushing their dreams of profit in the process.

Investors are nursing losses after an 8.2 percent fall in Bayer’s share price following news of its bid, which John Bennett of Henderson Global Investors, described as an “immediate destruction” of shareholder value.

U.S. seeds group Monsanto on Thursday said Bayer, led by recently appointed Chief Executive Werner Baumann, had made an unsolicited takeover proposal to create the world’s biggest agricultural supplier.

Bennett, in emailed comments to Reuters, said he was furious that Bayer had not engaged with him over the approach. He said that the “fine work” of Baumann’s predecessor Marijn Dekkers had been “ripped up”.

As CEO, Dekkers had initiated a separation of Bayer’s foam chemicals and transparent plastics business, Covestro, focusing Bayer on human, animal and plant health.

“I had hoped that the days of such arrogant empire-building and ignorance of the actual owners of the business were at an end,” Bennett said.

Bennett’s comments mark the most scathing attack yet on Bayer in a chorus of investor discontent mainly over the sheer size of the proposed deal.

Frankfurt-based Union Investment fund manager Markus Manns said he was skeptical of the merits of the takeover, in a telephone interview with Reuters on Friday.

While he saw strategic value in adding a large seeds business to Bayer’s crop chemicals unit, the size of the deal would stretch Bayer’s finances too much, he said.

“With a presumptive premium of 30 to 40 percent it would be quite a chunk,” Manns said, when based on Monsanto’s share price of about $90 before there was speculation about a bid.
His comments echo those of UBS GAM fund manager Maximillian Anderl on Thursday, who said he would prefer to see a joint venture or nil-premium merger.

Berenberg analyst Alistair Campbell said Bayer’s share price slump could hit the profit per share of the combined group as more Bayer shares would be needed to satisfy Monsanto investors in a share and cash deal.

The dilutive effect could be up to 10 percent by 2020, depending on deal terms, he said. “We have struggled to find investors who favor this transaction,” Campbell said.
Bayer shares rebounded somewhat on Friday and closed 1.2 percent higher.

Sources have said Bayer proposed to pay Monsanto shareholders with cash and stock, though the exact terms of any bid remained unclear.

“Bayer’s pharma business is in excellent health today, but the clock is ticking regarding rebuilding its pipeline and recent newsflow has been disappointing,” Campbell said.

“After a Monsanto deal it can largely be ruled out for Bayer to retain the financial flexibility over the next two to three years for acquisitions in the pharma market,” Union Investment’s Manns said.

Personally, I hope the deal goes through. The more oppressive the regime the better. Perhaps one day, man will create chimeras with genetically modified aspirins as a means to codify a new human genome project. Or, maybe the newly formed conglomerate can produce genetically modified foam that turns people into monsters, like a Dr. Jekyl and Mr. Hyde fairytale story. The possibilities are truly endless.