Bayer-Monsanto Merger Will Be a Winner, says Lux Research
Leverkusen, Germany: German giant Bayer's $ 66 billion procurement of Monsanto is a winning deal that will create a global player with robust positions in key areas of agriculture innovation, comprising crop and seed traits, synthetic agrochemicals, and biologicals, as per Lux Research. However, the combined entity will be weak in Digital Ag, or precision agriculture.

Of the latest spate of megamergers in agriculture, the Bayer-Monsanto deal stands out not only because it is the major one, but also because it will create a company with substantial market shares in both agrichemicals and seeds. The new agriculture landscape will be even more amalgamated as the traditional 'Big Six' become the 'Behemoth Four' - Bayer-Monsanto, Dow -DuPont, Syngenta-ChemChina, and BASF.

"Bayer wins by procuring Monsanto's diversified capabilities in crop and seed traits, while the U.S. company gains Bayer's robust IP portfolio in synthetic agrochemicals. Together, the collective entity will be much stronger than other entities in the Behemoth Four but will be lacklustre in their Digital Ag portfolio," believed Laura Lee, Lux Research Associate and lead author of the report titled, 'Does Bayer's acquisition of Monsanto make sense?'.

Monsanto & Bayer deal having both Monsanto's Roundup and Bayer's Liberty brands under the same roof will give the combined entity a giant competitive advantage in agrochemicals and seeds. Monsanto's diversified relationships across various genome editing technologies will give the duo an advantage in this space.

According to Lux Research, Digital Ag is an apparent weakness. While Monsanto has built many Digital Ag partnerships, its approach is ludicrous. It has cooperated with many developers of untested technologies but ignored well-validated ones - a backwards approach.

Bayer is unexpectedly strong in biologicals. Monsanto is a recognised innovator in biologicals through its partnership with Novozymes called the BioAg association. But Bayer brings its own remarkably strong biologicals portfolio, amassed through four key acquisitions - Athenix, Prophyta, AgraQuest, and Laboratorios Biagro.