Bayer AG, the company that invented aspirin, will take on one of the business world's biggest headaches, after it proposed purchasing Monsanto Co. for 66 billion dollars. A possible remedy: stop using the name Monsanto.
The German pharmaceutical and chemical conglomerate is considering dropping the name Monsanto to avoid staining their reputation, according to people inside Bayer, who preferred to remain anonymous, as the talks are private.
A decision has not yet been taken and Bayer executives will have some time to think, as it's likely the purchase won't be completed before the end of 2017, due to antitrust revisions being performed in some 30 jurisdictions around the world.
Additionally, if the transaction is completed as proposed, merging the two companies to become the leading manufacturer of seeds and agrochemicals in the world, will present a huge challenge. Bayer will have to integrate a company that is famous for having developed the Agent Orange herbicide, used in the Vietnam War, and for having conflicts with environmental groups because of their genetically modified crops.
One possibility being studied by Bayer would be to market Monsanto products, such as its maize seeds and Roundup herbicide, under the name Bayer CropScience, said Joachim Kregel, who represents independent investors of the SDK German shareholders association.
Bayer has also been criticized by environmentalists, but it is better known as the company that introduced the aspirin to the market in 1899. In May, the company led the The Reputation Institute's world's most respected pharmaceutical brands ranking .
"If anyone can do it, it's Bayer", said Kregel.
Last week, in an interview with Bloomberg TV, the head of Monsanto, Hugh Grant, gave signs of being open to change.
An issue of reputation
"I've been very flexible," said Grant after the deal was announced on September 14. "The issue has less to do with the name of the company than with the products developed."
Werner Baumann, the head of Bayer, said, in a Q&A session with Grant, that this was an opportunity for the companies to overcome this image and reputation issue via the confidence that Bayer enjoys in Europe.
Environmentalists have campaigned against the transaction since the negotiations were revealed in May.
According to detractors, the fusion of the companies will increase prices for farmers and will favour the diffusion of genetically modified seeds.
Bayer and Monsanto have stated that their alliance will allow them to perform more research and create new products so that the farmers can produce more food.
US regulators say the food from genetically engineered plants is as safe as non-GM sources. The European Union has also approved the sale of GMO products.
Source: elfinanciero.com.mx