BSTR/565

IBS Center for Management Research

ST
PO
R
Bayer’s Acquisition of Monsanto O
PY
This case was written by Manish Agarwal (IBS Hyderabad) and Aruna Polisetty (Gitam Institute of Management), under the
direction of Sanjib Dutta, (IBS Hyderabad). It was compiled from published sources, and is intended to be used as a basis for
class discussion rather than to illustrate either effective or ineffective handling of a management situation.
CO
T
O
N
O
D

 2019, IBS Center for Management Research. All rights reserved.

To order copies, call +91 9640901313 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 203, Telangana, India or email: casehelpdesk@ibsindia.org

www.icmrindia.org
 BSTR/565

Bayer’s Acquisition of Monsanto

ST
“The acquisition of Monsanto is a strategic milestone in strengthening our
portfolio of leading businesses in health and nutrition. We will double the size of
our agriculture business and create a leading innovation engine in agriculture,

PO
positioning us to better serve our customers and unlock the long-term growth
potential in the sector.”1
– Werner Baumann, Chairman of the Board of Management of Bayer AG,
June 2018
“Today’s closing represents an important milestone toward the vision of creating

R
a leading agricultural company, supporting growers in their efforts to be more
productive and sustainable for the benefit of our planet and consumers.”2

INTRODUCTION O
– Hugh Grant, Chairman & CEO of Monsanto, June 2018
PY
On June 7, 2018, German-based Bayer AG (Bayer) completed the acquisition of US-based The
Monsanto Company (Monsanto) for US$63 billion. 3 Werner Baumann, the then Chief Executive
Officer (CEO) and Chairman of the Board of Management of Bayer, said, “We will listen to our
critics and work together where we find common ground. Agriculture is too important to allow
ideological differences to bring progress to a standstill.”4
CO

After the merger, the combined entity announced that it would invest US$16 billion on
collaborative R&D worldwide over the next six years.5 Analysts believed that the deal would help
Bayer to make significant inroads into the digital farming space. Additionally, it would help the
company gain global leadership in the seed and pesticide markets and achieve expected per annum
synergies of US$1.3 billion three years after the merger.6
T

Despite the several benefits expected of the merger, many groupsa opposed the deal as it further
consolidated the seed and pesticide market, reducing the bargaining power of customers and
leaving them with fewer choices besides increasing market concentration in a market which was
O

already highly concentrated.

Analysts observed that over the years, Monsanto had come to be known for its controversial
N

operations and been criticized by environmentalists for its Genetically Modified Organisms b
(GMOs) and pesticides. Therefore, it would be a major challenge for Dubliner Liam Condon
(Condon), CEO of Bayer’s CropScience division who was in charge of integrating Bayer and
Monsanto, to overcome the negative image of Monsanto. Besides this, the culture of the two
O

companies was quite different and integrating companies with two different cultures could be
another challenge for Condon. It remained to be seen how well Condon and his team would
D

overcome these challenges and achieve the anticipated synergies.

a
American Antitrust Institute (AAI), Food & Water Watch (FWW) and National Farmers Union (NFU).
b
Genetically Modified Organism (GMO) is an organism in which the DNA is altered and modified by
using genetic engineering tools. Although GMO products have many benefits such as more yield per
acre, preventing weeds, making crops more resilient to diseases. etc., there were many controversies
around them as well across the world. In 2015, 38 countries banned cultivation of GMO crops.

1
 Bayer’s Acquisition of Monsanto

ABOUT BAYER GROUP

Bayer, a global life sciences company, had operations in 79 countries around the world with 241
fully-owned consolidated subsidiaries by 2017.7 Its products portfolio included crop protection
products, seeds prescription products, nonprescription products, animal health products, and
nonagricultural pest control products.
The company was started in 1863 as a partnership firm “Friedr. Bayer et comp.” by Friedrich

ST
Bayer and Johann Friedrich Weskott to manufacture and sell synthetic dyestuffs for the textile
industry. In 1881, the partnership firm converted itself into a joint stock company. It then
established a pharmaceutical department in 1888. In 1899, Bayer introduced the world’s popular
iconic drug Aspirin. 8

PO
Between 1881 and 1914, Bayer established subsidiaries in various parts of the world such as
France, Russia, Belgium, the UK, and the US. By 1913, it had become a global enterprise with
80% of its revenue coming from exports. At that time, it had 10,000 employees, of whom 1,000
plus worked outside Germany.9 Bayer’s expansion was interrupted during the First and Second
World Wars. In both the wars, it lost foreign assets, patents, and export markets. By 1963, after
completing 100 years, Bayer had about 80,000 employees around the world and was generating

R
DMc 4.7 billion10 in sales.
In the 1970s, Bayer acquired two US-based companies – Cutter Laboratories Inc.d in 1974 and

O
Miles Laboratories Inc.e in 1978. By 1987, the group was generating more than two-thirds of its
sales from outside of Germany and 45% of its employees were from outside the country. In 1988,
the company started an Agriculture Center and Research Center to expand its R&D efforts in the
pharma and crop protection areas.
PY
In 2001, Bayer acquired Aventis CropSciencef (ACS) for €g7.25 billion. 11 This acquisition helped
Bayer to become the leading global crop protection company. In 2006, the company acquired
Schering AGh (Schering) for €17 billion. Industry experts opined that this deal was a complex one.
However, Bayer successfully completed the acquisition and delivered significant value for
CO

stakeholders. There were many other acquisitions and divestitures between 2005 and 2017 and
Bayer successfully acquired many companies such as Sterling Winthrop, Roche, Miles Labs, the
Bomac Group, Granar S.A., Merck’s OTC business, etc. 12
In 2013, the company celebrated its 150th foundation anniversary with its 110,000 employees. By
the end of 2017, Bayer’s business operations were divided into Pharmaceuticals, Consumer
T

Health, Crop Science, and Animal Health (Refer to Exhibit I for business segments of Bayer). In
terms of revenue, Pharmaceuticals was the largest segment contributing 48% of the revenues in
2017 followed by the Crop Science division (27%), the Consumer health division (17%), the
O

Animal health division (4%), and Others (4%).

By the end of 2017, Bayer’s operations were mainly concentrated in Europe, the Middle East,
N

Africa, Asia-Pacific, Latin America, and North America. Geographically, Europe/the Middle
East/Africa was the largest region in terms of sales followed by North America (Refer to Exhibit II
for Bayer’s sales by region).13
O

c
Deutsche Mark (DM) was the German currency from 1948 till Germany adopted the Euro (€) in 2002.
d
D

Cutter Laboratories Inc. was pharmaceutical founded by Edward Ahern Cutter in the US in 1897.
e
Miles Laboratories Inc. was founded by Franklin Lawrence Miles in 1884. The company was expert in
the treatement of eye and ear.
f
Aventis CropScience (ACS) was an agrochemicals company majorly owned by Aventis before it was
acquired by Bayer.
g
€ is the symbol of the Euro. In January 2019, one US$ was approximately equal to €0.88
h
Germany-based Schering AG was a pharmaceutical company founded in 1851.

2
 Bayer’s Acquisition of Monsanto

However, Bayer was lagging behind in the global seeds market with revenue of US$1.8 billion in
FY17 compared to the US$10.9 billion revenue generated by Monsanto during the same period
(Refer to Exhibit III for seed sales of leading global companies). In agrochemical sales, Bayer was
the second leading global company with US$8.7 billion sales in 2017 (Refer to Exhibit IV for
agrochemical sales of leading global companies).
Bayer generated a net profit of €7.34 billion in 2017 compared to €4.53 billion in 2016 (Refer to
Exhibit V for selected items from the income statement of Bayer).14 In 2017, it divested itself of
€5.26 billion (€115 million in 2016) worth of net assets, which helped the company to increase its

ST
cash and cash equivalents from €1.9 billion in 2016 to €7.6 billion in 2017 (Refer to Exhibit VI for
selected items from the balance sheet of Bayer).

ABOUT THE MONSANTO COMPANY

PO
As of 2017, Monsanto was a leading creator and supplier of Genetically Modified (GM) seeds.
The company was founded in 1901 by John Francis Queeny to produce saccharin, an artificial
sweetener. In 1907, the United States Department of Agriculture (USDA) investigated the use of
saccharin as a sugar replacement and found that it was violating the Pure Food & Drug Act, 1906.
However, during World War I, due to the shortage of sugar, US authorities withdrew the

R
restrictions on saccharin. 15
In 1915, caffeine and vanillin were added to the product line of Monsanto and sales reached US$1

O
million. During 1935-1977, Monsanto added many Polychlorinated biphenyli (PCB) products to its
product line. In 1966, Swedish scientists reported that PCBs led to health hazards and damage to
the environment. Even though Monsanto knew about the ill effects of PCBs, it continued
production and voluntarily stopped selling PCBs only in 1972. Though it continued selling them
PY
for use in enclosed electrical applications. 16 In 1979, PCBs were completely banned in the US.
In 1996, Monsanto introduced genetically engineered Roundup Ready Soybeans which included
glyphosatej. By 2001, within 5 years of the introduction of these soybeans, Monsanto’s GM crops
business was accounting for 91% of the world’s GMO crops. By 2002, Monsanto had become the
CO

world’s second largest seed company and the third biggest agrochemical company. 17 Between
2006 and 2007, Monsanto bought cotton seed leader Delta and Pine Land Companyk and many
regional seed companies, thus, gaining a monopoly in the seed industry.18
In 2009, Doug Gurian-Sherman, then a scientist at the Union of Concerned Scientists (UCS)l,
came up with a report titled ‘Failure to Yield’. The report stated that the biotechnology industry, in
which Monsanto was one of the leading players, had failed to improve US agriculture production
T

significantly even after 13 years of commercialization.19

In 2011, the Public Patent Foundationm filed lawsuits against Monsanto’s patents on GM seeds
O

alleging that the GM seeds contaminated crops. There was another case filed against Monsanto in
September 2015 in New York and California, for the hazardous ingredient in Roundup,
glyphosate, which was alleged to cause cancer. Another lawsuit was filed against the use of
N

glyphosate by Delaware Superior Court in October 2015.20 Monsanto settled 700 cases out of court
between 1997 and 2010.21
O

i
Polychlorinated biphenyls (PCBs) are human made organic compounds used in commercial and
industrial applications, electrical equipment, motor oils, cables, fluorescent lights, thermal insulation etc.
D

j
Glyphosate is an herbicide, used to kill weeds in plants and grasses. It can be used in agriculture, gardens,
forestry, and industrial areas.
k
The Delta and Pine Land Company was a cotton seed producer established in 1915.
l
The Union of Concerned Scientists (UCS) was founded by scientists and students of Massachusetts
Institute of Technology in 1969 to find the solution of global problems.
m
The Public Patent Foundation is a US-based not-for-profit organization which provides legal service to
protect the freedom of patent system.

3
 Bayer’s Acquisition of Monsanto

The increasing number of lawsuits against Monsanto and the restrictions on GM crops forced the
company to use genome-editingn tools. Monsanto was the first company which got a license from
the Board Institute of MIT and Harvardo for commercial research of genome-editing tool CRISPR-
Cas9p in the area of agriculture. In 2018, Monsanto invested US$125 million in Pairwise Plants, a
start-up involved in gene editing, for advanced research in agriculture and exclusive research in
corn, soybeans, wheat, cotton, and canola crops.22
Monsanto generated revenue through two segments: Seeds and Genomicsq and Agriculture
Productivityr. Seeds and Genomics played a vital role in revenue generation for Monsanto. During

ST
2017, the Seeds and Genomics segment generated US$10.9 billion in revenue, which was 75% of
Monsanto’s total revenue. The remaining 25% came from the Agriculture Productivity segment
(Refer to Exhibit VII for Monsanto’s sale from different segments). Monsanto’s net sales fell from
US$15 billion in 2015 to US$13.5 billion in 2016 due to a decline in commodity prices in late 2015

PO
and early 2016 (Refer to Exhibit VIII for selected items from the income statement of Monsanto ). 23
In 2017, the company spent US$1.6 billion on R&D, which was US$95 million more than what it
had spent in 2016. As of August 31, 2016, Monsanto had US$19.74 billion worth of total assets.
This had increased to US$21.33 billion by the end of August 2017 (Refer to Exhibit IX for selected
items from the balance sheet of Monsanto).

R
Monsanto had operations spread across more than 150 countries around the world. The company
generated a major part of its revenue from the US, which accounted for about 56% of its revenues
in 2017 followed by Europe-Africa (13%), Brazil (12%), and other countries (Refer to Exhibit X
for Monsanto’s sales by geography).

THE DEAL O
PY
In 2014, the price of agricultural commodities worldwide had fallen by 20% due to excess supply
and poor demand in the worldwide agriculture commodities market.24This resulted in a fall in sales
as well as in the margins of the overall industry. Experts stated that the Bayer-Monsanto deal was
announced in an environment where the industry was already going through a consolidation (Refer to
CO

Exhibit XI for timeline of M&A activities in the pesticides and seed market). In addition to this, the
controversies around GMO and cost reduction pressure also pushed Bayer into acquiring Monsanto.
On September 14, 2016, Bayer announced that it had acquired Monsanto. The acquisition was
expected to help Bayer become a global leader in the agrochemical industry. After four months of
negotiations, both companies agreed on a deal value of US$66 billion (€58.8 billion), which was a
44% premium on Monsanto’s closing share price of US$89.03 on May 9, 2016, a day before Bayer
T

first submitted its formal proposal to acquire Monsanto.25 The bid price was revised three times s
and it increased by US$6 per share since the opening bid of US$122 made by Bayer for every
share of Monsanto on May 10, 2016.26 Bayer agreed to pay breakup fees of US$2 billion to
O

Monsanto if the deal collapsed. 27

N

n
Genome editing is a method used by scientists in which DNA (Deoxyribo Nucleic Acid) is changed or
modified in the genome of a living organism such as plants, animals, and bacteria, to bring about changes
in physical traits, etc.
O

o
The Board Institute came into existence in 2004 with collaborative efforts of MIT and Harvard to drive
the transformation of medicine.
p
CRISPR stands for Clustered Regularly Interspaced Short Palindromic Repeats. Cas9 stands for CRISPR
D

associated protein 9.
q
The Seeds and Genomics segment of Monsanto mostly deals with Corn seed, Soybean seed, Cotton seed,
Vegetable seed and other seeds and traits.
r
Agriculture productivity segment of Monsanto deals with agro chemicals such as pesticides, fungicides etc.
s
The first bid price for Monsanto was US$122 on May 10. Then it changed three times. Bayer raised the
price to US$125 on July 14, 2016, and then to USE127.50 on September 5. Then finally, the bid price
was increased to US$128 per share on September 13.

4
 Bayer’s Acquisition of Monsanto

In 2016, Bayer expected per annum benefits of US$1.5 billion three years after the merger by
eliminating overlapping functions and overheads. 28 Of the savings, 80% would come from cost
synergies through cost-cutting in administration, sales, and marketing and the rest would come
from sales synergies. The total financial synergies would be nearly 6% of the US$26 billion in
revenue of the combined agricultural businesses of both companies. 29
The deal was not only the biggest in Bayer’s history but also the most costly deal by a German
company till that point. Some Bayer shareholders believed that the company had overpaid for

ST
Monsanto. Bayer planned to raise debt worth €23 billion by bond issue, €18 billion through bank
loans, €12 billion by shares issue, and €5 billion through convertible debt. Due to this, Bayer’s
debt increased from €17.8 billion before the deal was announced to €59.2 billion after the deal
announced in 2016.30 Experts opined that there was the probability that high debt would reduce the
credit rating of Bayer.

PO
There were several hurdles that came in the way of the proposed deal, which delayed its
completion by almost two years. One of the major reasons for the delay was regulatory and legal
hurdles created due to the antitrust image of Monsanto. The deal was opposed by
environmentalists because it could potentially harm the environment. Economists opposed the deal
saying it could lead to market concentration due to the elimination of competition between two

R
major players and their combined product portfolio leading to fewer alternatives for the farmers.
Market concentration could also result in an increase in food prices for consumers. According to a

market share and seed prices.

O
study by The Farmers Business Networkt, there was a positive correlation between the company’s

To meet the regulatory obligations, Bayer agreed to divest itself of its vegetable seed business,
PY
digital farming business, and seed treatment activities. It sold these businesses to Badische Anilin
und Soda Fabrik AG31 (BASF) for €1.7 billion. In addition to this, Bayer sold its field crop seed
business and many other businesses to BASF for €5.9 billion. 32 Accordingly, Bayer sold assets
which had the capacity to generate revenue worth €2.2 billion (US$2.6 billion) to BASF in an all-
cash deal of €7.6 billion (US$8.8 billion). However, due to this divestment, Bayer reduced the
CO

synergy target by US$300 million to US$1.2 billion on its earnings before interest, taxes,
depreciation, and amortization (EBITDA).33,34 In June 2018, in an investor presentation, Bayer
stated that it targeted annual cost synergies of approximately US$1 billion and annual sales
synergies of approximately US$200 million by 2022.u
Finally, in the first half of 2018, Bayer got the regulatory approvals for the acquisition of
Monsanto for a revised amount of US$63 billion, including debt. Baumann said, “Bayer will
T

become the solo shareholder of Monsanto on June 7 (2018).”35 The deal amount was revised as
Monsanto had reduced its financial liabilities. 36 Bayer decided to drop the Monsanto name after the
O

merger was completed. In a statement after the deal, a Bayer executive stated that the deal would
help farmers and consumers alike. Famers would now use fewer chemicals to produce the same
amount of crops, whereas the consumer would get more affordable and healthier food items which
N

would become possible through innovation by the combined entity.

Analysts were of the view that Monsanto had significant intellectual property portfolios and
expertise in digital farmingv which it had created over a period of time. Monsanto’s exposure to
O

digital technologies would help Bayer increase crop yield. The combined expertise would help
address the growing global demand for increasing crop yield due to the rising global population.
D

t
Farmers Business Network is a US-based farmer-to-farmer information network which aims to improve
the livelihood of farmers.
u
“Monsanto Acquisition Update,” www.investor.bayer.de/securedl/16185, June 2018.
v
Farmers use the digital farming tools, which function through satellite and sensors, to enhance their
production. Digital farming tools help the farmers to choose the best seeds and best chemicals in the right
quantity at the right time.

5
 Bayer’s Acquisition of Monsanto

Experts stated that the two companies complemented each other in terms of products portfolio as
well as in terms of geography. Bayer was strong in fungicides w, herbicidesx, and insecticides y
whereas Monsanto was an expert in seeds such as corn, soybeans, and vegetables. The deal
would also help Bayer expand its operations in the US market, where Monsanto had a strong
presence. Monsanto held double the number of patents in the seed market in Europe when
compared to Bayer. 37
Experts opined that Monsanto’s expertise in digital tools and the seed market was a key driver of the

ST
deal. The deal put Bayer in a leading position in the global pesticides as well as seeds market. The
combined entity controlled more than 25% of the world’s supply of pesticides and seeds (Refer to
Exhibit XII for market share of Leading Global Players in Pesticides and Seeds Markets).38

CHALLENGES AHEAD

PO
The negative image of Monsanto was one of the major challenges that Bayer would have to
grapple with. Although Bayer had decided to drop Monsanto’s name as soon as the deal was
completed, industry observers felt that just removing the Monsanto name without changing the
products would not really help the company to allay customers’ apprehensions. Some experts

R
stated that realizing anticipated synergies could be another challenge for the Bayer management.
Another challenge came from the financing part of this deal. Although Bayer had successfully

O
acquired the necessary funds to meet the obligations of the Monsanto purchase, repayment of the
debt would be a daunting task for it and it could impact the company’s future investment
decisions, opined experts.
PY
Another major challenge before the merged entity was to integrate the different work cultures
prevailing at both the pre-merged companies. Bayer practiced the formal German work culture
whereas Monsanto followed the informal work culture prevalent in the US. In an article titled
“Cultural Issues in Combining Monsanto and Bayer” published in Forbes, the author wrote, “How
it [Bayer] manages the cultural integration will make a huge difference to the future success of the
CO

combined entity. Bayer’s bias should be to subsume the Monsanto culture along with its people
and products as cleanly as possible.”39
T
O
N
O
D

w
Herbicide is a chemical substance used to destroy unwanted vegetation in crops.
x
Fungicide is a chemical substance used to prevent or kill fungus.
y
Insecticide is a chemical substance used to prevent or kill insects.

6
 Bayer’s Acquisition of Monsanto

Pharmaceuticals
Prescription medicines for
 Cardiovascular diseases
 Oncological diseases
Exhibit I:
Bayer’s Business Segments
Consumer Health Crop Science
 Including over-the-counter Crop Protection
medicines, dietary supplements,  Insecticides, Fungicides,
dermatology products, foot care Herbicides, Seed Treatment
products, sunscreens and other

ST
 Ophthalmology non-prescription products. Seeds

 Women’s Healthcare  Prescription dermatology  Vegetable Seeds, Seeds for

products. Agricultural Crops, Traits
 Hematology
Digital Farming
 Radiology
 Climate FieldView Software

PO
 Other diseases: multiple
 Environmental Science
sclerosis, infections, erectile
dysfunction, testosterone  Professional Products
deficiency
Animal Health
Products and services for the

R
prevention and treatment of diseases
in companion and farm animals.
Source: www.bayer.com/en/bayer-organizational-structure-2019-01-01.pdfx.

Exhibit II:
O
PY
Bayer’s Sales by Region in 2017
(in € million)
CO

Asia/Pacific,
7,637, 22% North America,
10,143, 29%
T

Latin America,
O

Europe/Middle East/Africa, 3,847, 11%

13,388, 38%
N

Adapted from Bayer Annual Report 2017.

O
D

7
 Bayer’s Acquisition of Monsanto

Exhibit III:
Seed Sales of Leading Global Companies for FY16 and FY17
(in US$ million)

12,000 10,913
9,988
10,000
8,188 8,143

ST
8,000

6,000

PO
4,000
2,657 2,826
1,746 1,900 1,427 1,805
2,000

0
Monsanto Corteva Agriscience Syngenta Limagrain Bayer
(DowDuPont) (ChemChina)

R
FY-16 FY-17

Source: Jason Zhang, “Top 20 Global Seed Companies in 2017,”

O
www.accesstoseeds.org/app/uploads/2018/07/Top20GlobalSeed.pdf, (Accessed on December 17, 2018).
PY
Exhibit IV:
Agrochemical Sales of Leading Global Companies for 2016 and 2017
(in US$ million)
CO

12,000

10,000 9,571 9,244

8,810 8,713

8,000 7,163
T

6,704
6,162 6,100
6,000
O

4,000 3,514 3,727

N

2,000

0
O

Syngenta Bayer BASF DowDuPont Monsanto

2016 2017
D

Source: Agrow, “Top 20 2018,” https://agrow.agribusinessintelligence.informa.com/-/media/agri/agrow/ag-

market-reviews-pdfs/supplements/agrow_top20_2018_online.pdf, (Accessed on December 17, 2018)

8
 Bayer’s Acquisition of Monsanto

Exhibit V:
Selected Items from the Income Statement of Bayer for the Period 2013-2017
(in € million except per share data)
Fiscal year ends in December 2013 2014 2015 2016 2017
Revenue 40,157 41,339 46,085 34,943 35,015
Cost of revenue 19,516 19,909 21,040 11,756 11,382

ST
Gross profit 20,641 21,430 25,045 23,187 23,633
Operating Expenses
Research and development 3,406 3,537 4,274 4,405 4,504

PO
Sales, General and administrative 12,024 12,372 14,364 12,952 13,142
Other operating expenses 121 -96 -385 -186 -123
Total operating expenses 15,551 15,813 18,253 17,171 17,523
Operating income 5,090 5,617 6,792 6,016 6,110

R
Interest Expense 899 940 1,039 889 871
Other income (expense) 16 -263 -517 -354 -662
Income before taxes
Net income
Net income available to common shareholders
4,207
3,189
3,189 O 4,414
3,426
3,426
5,236
4,110
4,110
4,773
4,531
4,531
4,577
7,336
7,336
PY
Earnings per share (Basic and Diluted) 3.86 4.14 4.97 5.44 8.41
Weighted average shares outstanding
827 827 827 833 872
(Basic and Diluted)
EBITDA 8,002 8,274 9,607 8,725 8,108
CO

Source: http://financials.morningstar.com/income-statement/is.html?t=BAYZF&region=usa&culture=en-US.

Exhibit VI:
Selected Information from the Balance Sheet of Bayer
(in € million)
T

As of December 31, 2013 2014 2015 2016 2017

O

Cash and cash equivalents 1,662 1,853 1,859 1,899 7,581

Short-term investments 138 204 272 3,525 1,517
N

Total cash 1,800 2,057 2,131 5,424 9,098

Receivables 7,569 9,097 9,933 10,969 8,582
Inventories 7,114 8,384 8,537 8,387 6,537
O

Other current assets 2,530 2,595 3,207 5,646 5,843

Total current assets 19,028 22,227 23,821 30,447 30,073
D

Gross property, plant and equipment 28,455 31,319 33,540 35,529 18,836
Net property, plant and equipment 10,015 11,428 12,375 13,114 7,633
Goodwill 9,862 15,347 16,096 16,312 14,751
Intangible assets 8,914 15,653 15,178 13,567 11,674
Other long-term assets 1,785 1,736 1,738 2,422 6,005

9
 Bayer’s Acquisition of Monsanto

As of December 31, 2013 2014 2015 2016 2017

Total non-current assets 32,289 48,007 50,096 51,791 45,014
Total assets 51,317 70,234 73,917 82,238 75,087
Short-term debt 3,273 3,027 2,764 3,033 1,682
Accounts payable 4,473 5,363 5,945 6,410 5,129
Taxes payable 479 878 1,351 1,411 840

ST
Other current liabilities 5,747 6,182 6,861 7,624 5,910
Total current liabilities 14,023 15,503 16,980 18,537 13,593
Long-term debt 5,065 17,748 15,931 15,525 12,258

PO
Pensions and other benefits 7,368 12,236 10,873 11,134 8,020
Other long-term liabilities 2,330 2,514 2,494 2,621 2,025
Total liabilities 30,599 50,128 49,652 51,905 38,286
Total stockholders’ equity 20,718 20,106 24,265 30,333 36,801

R
Total liabilities and stockholders’ equity 51,317 70,234 73,917 82,238 75,087
Source: http://financials.morningstar.com/balance-sheet/bs.html?t=BAYZF&region=usa&culture=en-US.

Exhibit VII:
O
Monsanto’s Sales by Segment in 2017
PY
CO
T
O
N

Source: “Monsanto – 2017 Annual Report,” https://www.sec.gov/Archives/edgar/data/1110783/0001110783

17000187/mon-20170831x10k.htm#sE5A05240488B5D6D91DE9C9A345FD695.
O
D

10
 Bayer’s Acquisition of Monsanto

Exhibit VIII:
Selected Items from Income Statements of Monsanto during 2015-2017
(In US$ million except per share amounts)
Year Ended August 31, 2015 2016 2017
Net Sales 15,001 13,502 14,640
Cost of goods sold 6,819 6,485 6,703

ST
Gross Profit 8,182 7,017 7,937
Selling, general and administrative expenses 2,686 2,833 2,969
Research and development expenses 1,580 1,512 1,607
Restructuring charges 393 297 (36)

PO
Pending Bayer transaction related costs - - 185
Total Operating Expenses 4,659 4,642 4,725
Income from Operations 3,523 2,375 3,212
Interest expense 433 436 452

R
Income from Continuing Operations Before Income Taxes 3,161 1,991 2,886
Income tax provision 864 695 626
Income from Continuing Operations Including
Portion Attributable to Non-controlling Interest
Net Income O 2,297
2,325
1,296
1,313
2,260
2,273
PY
Basic Earnings per Share Attributable to Monsanto
Company:
Income from continuing operations $ 4.79 $ 2.98 $ 5.12
Income on discontinued operations 0.06 0.04 0.03
CO

Net Income Attributable to Monsanto Company $ 4.85 $ 3.02 $ 5.15

Diluted Earnings per Share Attributable to Monsanto
Company:
Income from continuing operations $ 4.75 $ 2.95 $ 5.06
Income on discontinued operations 0.06 0.04 0.03
T

Net Income Attributable to Monsanto Company $ 4.81 $ 2.99 $ 5.09

Weighted Average Shares Outstanding:
O

Basic 476.90 442.70 438.80

Diluted 481.40 447.10 443.80
N

Source: “Monsanto – 2017 Annual Report,”

https://monsanto.com/app/uploads/2017/12/2017_Monsanto_Annual_Report.pdf, October 27, 2017.
O
D

11
 Bayer’s Acquisition of Monsanto

Exhibit IX:
Selected Items from Balance Sheet of Monsanto
(In US$ million except per share amounts)
As of August 31, 2015 2016 2017
Cash and cash equivalents 3,701 1,676 1,856
Short-term investments 47 60 8

ST
Trade receivables, net 1,636 1,926 2,161
Miscellaneous receivables 803 755 827
Inventory, net 3,496 3,241 3,340
Assets held for sale 7 272 199

PO
Other current assets 192 227 260
Total Current Assets 10,625 8,157 8,651
Total property, plant and equipment 10,428 11,116 12,231
Less: Accumulated depreciation 5,455 5,885 6,301

R
Property, plant and equipment, net 4,973 5,231 5,930
Goodwill 4,061 4,020 4,088

O
Other Intangible Assets, Net 1,332 1,125 1,024
Total Assets 21,920 19,736 21,333
Current Liabilities:
PY
Short-term debt, including current portion of long-term debt 615 1,587 870
Accounts payable 836 1,006 1,068
Income taxes payable 234 41 58
Accrued compensation and benefits 304 239 578
CO

Total Current Liabilities 5,177 6,729 6,398

Long-Term Debt 8,429 7,453 7,254
Postretirement Liabilities 336 371 313
Long-Term Deferred Revenue 47 35 114
Noncurrent Deferred Tax Liabilities 340 68 192
T

Long-Term Portion of Environmental and Litigation Liabilities 194 200 218

Long-Term Restructuring Reserve 47 17 9
O

Other Liabilities 345 318 377

Shareowners’ Equity:
N

Common stock (authorized: 1,500,000,000 shares, par value US$0.01)

Issued 611,435,047 and 609,350,452 shares, respectively
Outstanding 437,795,024 and 467,903,711 shares, respectively 6 6 6
O

Treasury stock 173,640,023 and 141,446,741 shares, respectively, at cost (12,053) (15,053) (15,053)
Additional contributed capital 11,464 11,626 11,840
D

Retained earnings 10,374 10,763 12,072

Accumulated other comprehensive loss (2,801) (2,808) (2,427)
Total Monsanto Company Shareowners’ Equity 6,990 4,534 6,438
Total Liabilities and Shareowners’ Equity 21,920 19,736 21,333
Source: “Monsanto – 2017 Annual Report,”
https://monsanto.com/app/uploads/2017/12/2017_Monsanto_Annual_Report.pdf, October 27, 2017.

12
 Bayer’s Acquisition of Monsanto

Exhibit X:
Monsanto Sales by Geography in 2017
Mexico Other
Canada 3% 1%
Asia-Pacific 5%
4%

ST
Argentina
7%

Bazil
12% United States
55%

PO
Europe - Africa
13%

Source: “Monsanto – 2017 Annual Report,” https://www.sec.gov/Archives/edgar/data/1110783/000111078317000187/

R
mon-20170831x10k.htm#sE5A05240488B5D6D91DE9C9A345FD695.

Date of Announcement
Exhibit XI:
Timeline of M&A Activities in the Global Pesticides and Seed Market
Merger
O Date of Completion
PY
May 2015 Monsanto attempts to acquire Syngenta (offer rejected) Not Applicable
December 2015 Dow & DuPont merger announced September 2017
February 2016 Chem China announces Syngenta acquisition June 2017
CO

May 2016 Bayer announces Monsanto acquisition June 2018

Source: Samantha DeCarlo, “And Then There Were Four?: M&A in the Agricultural Chemicals Industry,”
www.usitc.gov/publications/332/executive_briefings/ag_ma_ebot_final.pdf, April, 2018.

Exhibit XII:
T

Market Share of Leading Global Players in Pesticides and Seeds Markets in 2015
(Prior to Announced Dow-DuPont M&A)
O

Syngenta
14%
N

Other
32%
Bayer
10%
O
D

Monsanto
17%

DuPont
14% BASF
Dow
6%
7%

Source: Samantha DeCarlo, “And Then There Were Four?: M&A in the Agricultural Chemicals Industry,”
www.usitc.gov/publications/332/executive_briefings/ag_ma_ebot_final.pdf, April, 2018.

13
 Bayer’s Acquisition of Monsanto

End Notes:

1
“Bayer Plans Closing of Monsanto Acquisition on June 7,” https://media.bayer.com/baynews/baynews.
nsf/id/Bayer-plans-closing-of-Monsanto-acquisition-on-June-7, June 4, 2018.
2
Bryce Gray, “After Nearly Two-Year Merger Process, Bayer Finally Owns Monsanto,” www.stltoday.
com/business/local/after-nearly-two-year-merger-process-bayer-finally-owns-
monsanto/article_d3b5e388-cafb-5157-a2f9-d3a4b78ea13b.html, June 7, 2018.

ST
3
Naomi Kresge and Tim Loh, “No Regrets’ for $63 Billion Monsanto Purchase, Says Bayer CEO
Bauman,” www.livemint.com/Companies/5oQiN5gpbeVrRBmsRPTkuI/No-regrets-for-63-billion-
Monsanto-purchase-says-Bayer-C.html, September 5, 2018.
4
“Bayer’s Desperate Bid to Rehabilitate Monsanto Will Fail - Experts to Rt,” www.rt.com/business/
429025-monsanto-buyer-hell-merger/, June 8, 2018.

PO
5
Dana Varinsky, “The $66 Billion Bayer-Monsanto Merger Just Got a Major Green Light - But Farmers
are Terrified,” www.businessinsider.in/The-66-billion-Bayer-Monsanto-merger-just-got-a-major-green-
light-but-farmers-are-terrified/articleshow/63690372.cms, April 10, 2018.
6
Jeff Daniels, “Germany's Bayer Closes $63 billion Monsanto Takeover, Plans to Drop US Company's
Name,” www.cnbc.com/2018/06/07/germanys-bayer-closes-monsanto-deal-plans-to-drop-us-companys-

R
name.html, June 7, 2018.
7
“Names, Facts, Figures about Bayer,” www.bayer.com/en/profile-and-organization.aspx.
8
“Becoming an International Company (1881–1914),” www.bayer.com/en/1881-1914.aspx.
9

10
(Accessed on December 17, 2018)
O
“Becoming an International Company (1881–1914),” https://www.bayer.com/en/1881-1914.aspx,

“Reconstruction and the “Economic Miracle” (1951–1974),” www.bayer.com/en/1951-1974.aspx

PY
11
“Transformation and Globalization (1988–2001),” www.bayer.com/en/1988-2001.aspx.
12
George Bradt, “Executive Onboarding Note: Cultural Issues in Combining Monsanto and Bayer,”
www.forbes.com/sites/georgebradt/2018/06/08/executive-onboarding-note-cultural-issues-in-combining-
monsanto-and-bayer/#6eaa10c62e38, June 8, 2018.
13
CO

“Bayer Annual report 2017,” www.investor.bayer.de/en/reports/annual-reports/overview/.

14
“Names, Facts, Figures about Bayer,” www.bayer.com/en/profile-and-organization.aspx.
15
“A History of Saccharin,” http://articles.latimes.com/2010/dec/27/health/la-he-nutrition-lab-saccharin-
timelin20101227, December 27, 2010.
16
“Monsanto Sold Banned Chemicals for Years despite Known Health Risks, Archives Reveal,”
www.theguardian.com/environment/2017/aug/09/monsanto-continued-selling-pcbs-for-years-despite-
T

knowing-health-risks-archives-reveal, August 10, 2017.

17
“Monsanto’s Dark History- 1901-2011,” http://bestmeal.info/monsanto/company-history.shtml,
O

(Accessed on December 21, 2018)

18
“Corrected - Timeline: History of Monsanto Co.,” www.reuters.com/article/us-food-monsanto-timeline/
timeline-history-of-monsanto-co-idUSTRE5AA05Q20091111, November 11, 2009.
N

19
“Failure to Yield: Evaluating the Performance of Genetically Engineered Crops (2009),” www.ucsusa.
org/food_and_agriculture/our-failing-food-system/genetic-engineering/failure-to-
yield.html#.XB0E0IszY2w, (Accessed on December 21, 2018)
20
Carey Gillam, “U.S. Lawsuits Build against Monsanto over Alleged Roundup Cancer Link,”
O

www.reuters.com/article/us-usa-monsanto-lawsuits/u-s-lawsuits-build-against-monsanto-over-alleged-
roundup-cancer-link-idUSKCN0S92H720151015, October 16, 2015.
D

21
Charlotte Silver, “Monsanto Versus the People,” www.aljazeera.com/indepth/opinion/2013/01/
201311071754973439.html, January 14, 2013.
22
Erin Brodwin, “Monsanto and Pairwise Announce R&D Collaboration to Accelerate Innovation in
Agriculture with Gene Editing,” https://monsanto.com/news-releases/monsanto-and-pairwise-announce-
rd-collaboration-to-accelerate-innovation-in-agriculture-with-gene-editing/, March 20, 2018.
23
Andrew Hecht, “How the Commodities Market Turned in 2016,” www.thebalance.com/bull-market-
commodities-4109252, April 24, 2018.

14
 Bayer’s Acquisition of Monsanto

24
Chee Yoke Heong, “Falling Commodity Prices a Bane for Developing Countries,” www.twn.my/title2/
resurgence/2015/293-294/cover09.htm, February, 2015.
25
“Bayer to Acquire Monsanto for $66 Billion All-Cash Deal,” https://economictimes.indiatimes.com/
articleshow/54328363.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst,
September 15, 2016.
26
“Historical Stock Price,” https://monsanto.com/investors/historical-lookup/, (Accessed on December 31,
2018).

ST
27
Nathan Bomey, “Big Deal: Bayer Getting Monsanto for $66B,” www.usatoday.com/story/money/2016/
09/14/bayer-monsanto-acquisition/90346412/, September 14, 2016.
28
“Bayer and Monsanto to Create a Global Leader in Agriculture,” https://media.bayer.com/baynews/
baynews.nsf/id/ADSF8F-Bayer-and-Monsanto-to-Create-a-Global-Leader-in-Agriculture, September 14,

PO
2016.
29
John Blau, Bayer’s Six Tough Challenges, www.handelsblatt.com/today/companies/agrochemical-giant-
bayers-six-tough-challenges/23540878.html?ticket=ST-1598288-B5ar5wvMOdpQqsfjkXUM-ap6,
September 15, 2016.
30
John Blau, Bayer’s Six Tough Challenges, www.handelsblatt.com/today/companies/agrochemical-giant-
bayers-six-tough-challenges/23540878.html?ticket=ST-1598288-B5ar5wvMOdpQqsfjkXUM-ap6,

R
September 15, 2016.
31
Badische Anilin und Soda Fabrik SE (BASF SE) was a leading chemical company in 2017. The company

32

33
was founded in 1865 in Germany.

O
“Bayer Completes Biggest Acquisition in its History,” www.quarterly-report-2018-q2.bayer.com/
quarterly-review/at-a-glance.html, (Accessed on December 26, 2018)
“BASF Closes Acquisition of Businesses and Assets from Bayer,” www.basf.com/global/en/media/news-
PY
releases/2018/08/p-18-285.html, August 1, 2018.
34
Patricia Weiss, “Bayer cuts Monsanto Synergy Target by $300 Million Due to Divestments,” https://in.
reuters.com/article/bayer-agm/bayer-cuts-monsanto-synergy-target-by-300-million-due-to-divestments-
idINKCN1IQ1ER, May 25, 2018.
35
CO

“Bayer to Complete Acquisition of Monsanto on June 7,” https://timesofindia.indiatimes.com/

business/india-business/bayer-to-complete-acquisition-of-monsanto-on-june-7/articleshow/64446929.
cms, June 4, 2018.
36
Ludwig Burger, “Bayer cuts Monsanto Deal Value to $63.5 Billion on Revised Debt,” https://in.reuters.
com/article/bayer-results/bayer-cuts-monsanto-deal-value-to-63-5-billion-on-revised-debt-
idINKBN1CV1SQ, October 26, 2017.
37
T

Adam Jones, “Synergies Monsanto and Bayer Could Exploit through a Merger,” https://marketrealist.
com/2016/09/synergies-monsanto-bayer-looking-exploit-merger, September 14, 2016.
38
Emma Cowan, “How Bayer Stands to Reinvent GMO with CRISPR and Monsanto Acquisition,”
O

https://agfundernews.com/how-bayer-stands-to-reinvent-gmo-with-crispr-and-monsanto-
acquisition.html/, September 19, 2016.
39
N

George Bradt, “Executive Onboarding Note: Cultural Issues in Combining Monsanto and Bayer,”
www.forbes.com/sites/georgebradt/2018/06/08/executive-onboarding-note-cultural-issues-in-combining-
monsanto-and-bayer/#6a6556fb2e38, June 8, 2018.
O
D

15