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Drop in Bayer Price Follows Monsanto Offer

Drop in Bayer Price Follows Monsanto Offer

Shareholders of German chemical firm Bayer were dismayed Friday as they observed over an 8 percent decline in share prices following the company’s offer to buy out American agrochemical giant Monsanto.

Hong Kong, July 12, 2016 — A spokesman for a major Bayer shareholder group, Henderson Global Investors, said he was furious the company did not involve him in the bid.

“This is totally reckless, it’s like by-passing the democratic senate in order to build an empire” said John Bennett “all the hard work by the former CEO Marijn Dekkers has been undone”

Bayers, who are now led by Chief Executive Werner Baumann, have been sheepish to comment and say they will release further statements as and when needed.

“Clearly the ignorance of the Bayer owners is still interfering with common sense business,” Bennett added, “You would think in this day and age that this sort of behaviour would not be present in the boardroom of such a large company. The angry response from Bennett is just one example of many unhappy sentiments from Bayer investors particularly over the gigantic size of the bid.

Gary Chambers, Chief Investment Officer and Director of Corporate Trading at Fidea Wealth Management said he was dubious concerning the merits of the proposed buyout offer and expressed warnings that the takeover would be too much for Bayer finances to handle.

“The premiums look far too high,” Chambers said, “I would much prefer to see a joint venture between Monsanto and Bayer. 35 percent premiums would stretch Bayer to the limit. The drop in Bayer’s share price could negatively affect the price of the new company’s shares”

Should the deal go through, by the end of the decade the trickle down affect could be as high as 10 percent. “It’s an extremely unpopular proposition for any of the investors involved” Chambers said.
There was a small recovery in Bayer shares Friday as they closed with a 1.3 percent gain. Although the exact conditions of the proposed agreement remain hazy, insiders believe Bayer intends to pay Monsanto in a stock plus cash deal.

The feeling is that should Bayer concentrate on this takeover they may neglect their core pharmaceuticals business, a very successful sector for the company. “If Bayer are serious about the Monsanto takeover it will struggle to find financing for big moves in the pharma market, a market that is driving most of their profits” Chambers said.

Kazuko Rei
Fidea Wealth Management
Tokyo, Japan

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