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Bayer monsanto merger an 88b marriage made in hell




GERMAN chemicals giant Bayer announced Wednesday an $88 billion ($US66 billion) deal to buy controversial US seeds and pesticides firm Monsanto, triggering immediate criticism from farmers and environmentalists.

After a months-long pursuit, Bayer said its US peer had accepted an improved offer of $US128 per share for Monsanto in an all-cash transaction, avoiding the need to resort to a hostile takeover.

If completed, the 58.8-billion-euro deal would mark the largest-ever takeover by a German firm and would create one of the largest firms in the agribusiness sector.

The combination with Monsanto represents the kind of revolutionary approach to agriculture that will be needed to sustainably feed the world, Bayer chief executive Werner Baumann told investors in a conference call.

But investors reaction in the US, where Monsanto shares rose 0.6 per cent but remained more than $US21 below the deal price, suggested deep market doubts that the deal can pass financial and antitrust hurdles.

Bayers share price initially leapt on news of the deal but fell back as the afternoon wore on, gaining 0.3 per cent to 93.55 euros.

Meanwhile environmental groups geared up for a fight. In a nod to fierce opposition in Europe to Monsantos use of genetically modified crops and its potent herbicide Roundup, Friends of the Earth labelled the tie-up a marriage made in hell.

This mega corporation will be doing its best to force damaging pesticides and GM seeds into our countryside, campaigner Adrian Bebb said in a statement.

The National Farmers Union in the US said the Bayer deal, along with other pending agricultural mergers, are being made to benefit the corporate boardrooms at the expense of family farmers, ranchers, consumers and rural economies.

The group said it looked forward to making its case at a congressional hearing next week to be chaired by Senator Charles Grassley, who plans to press antitrust regulators to ensure that farmers benefit robust competition from suppliers. Grassley represents the farm-rich midwestern state of Iowa.

Iowa farmers who Ive spoken with are worried about rising input costs, especially in an increasingly weak agriculture economy, Grassley said in a statement. Todays announcement will only heighten those concerns.

The deal is expected to be completed by the end of 2017, Bayer said, though it still requires shareholder and regulatory approval.

Baumann said that he had already received encouraging feedback from regulatory agencies.

There is very little overlap between the two companies that might concern regulators, Monsanto CEO Hugh Grant told investors on Wednesday. I think its a very clean deal.

But the Bayer-Monsanto tie-up comes in the wake of two other proposed mega-mergers involving US companies DuPont and Dow Chemical, and Swiss company Syngenta and ChemChina.

They also come as low crop prices take a toll on farmer incomes in many countries.

German Green Party MEP Martin Haeusling insisted that its up to German regulators and European competition commissioner Margrethe Vestager to stop Bayer from dominating the worldwide agrochemicals market.

A LONG ENGAGEMENT

Bayer best known as the company behind aspirin has been wooing Monsanto since late May, when it made an initial bid of $US122 per share, valuing the crop giant at $83 billion ($US62 billion).

Monsanto rejected that bid, but said it was open to further talks. The 153-year-old German chemicals behemoth then raised its offer twice more but was rebuffed each time as Monsanto held out for more money.

Under its final bid, Bayer also offered to pay Monsanto a $2.7 billion ($US2 billion) fee in case the merger is rejected by US or European authorities.

We do not like this transaction, because we think that Bayer is overpaying significantly, wrote analyst Peter Spengler of DZ bank on Wednesday before the deal was confirmed.

But Bayer said that it expects synergy savings from the merger will allow it to add $2 billion ($US1.5 billion) to its underlying profit as measured by EBITDA within three years.

Added together, Bayer and Monsanto booked sales of $34.6 billion (23 billion euros) in 2015.

CRIES OF DISMAY

As well as Monsantos genetically modified crops, environmental campaigners in Europe are also highly critical of its best-selling weedkiller Roundup, whose active ingredient glyphosate is suspected of being a carcinogen.

In Europe, debate about glyphosate has reached Brussels, where EU member states in July voted to restrict its use by the blocs farmers for 18 months.

The merged firm will play a defining role in deciding which seeds and pesticides come onto the market, warned Greenpeace agriculture expert Dirk Zimmermann.

Bayer on Monday made a US$122-a-share offer to acquire Monsanto, in a deal that could create one of the world's largest agrochemical businesses. WSJ's Lee Hawkins explains the offer.

Bulk buying can halve your costs and not just at supermarkets




BUYING in bulk brings big discounts for grocery shoppers, and people prepared to look beyond the supermarket shelves can also pocket significant savings.

From cleaning products to meat, cheap things do come in big packages, consumer experts say.

I think most people consider it too hard, and dont understand how much money they are going to save. If you are halving your bills, its a massive amount of money that you dont have to work to earn, says simplesavings.com.au founder Fiona Lippey.

But buying in bulk doesnt work for all things. Its pointless for perishables such as fruit and vegetables, and Queensland Consumers Association spokesman Ian Jarratt says its not a good idea if goods are going to be wasted.

Be careful that you dont consume more than what you normally would, he says.

Its easy to measure bulk prices against smaller packages at major supermarkets, which are the only retailers required by law to show the unit pricing of how much you get per 100g or 100ml. Jarratt says consumers have to work harder in other stores to compare the benefits of bulk buying, but its still worth shopping around.

Here are some goods that can be great to buy in bulk.

HEALTH SUPPLEMENTS

From multivitamins and fish oil to protein powder and weight-loss supplements, consumers can halve what they spend by choosing bulk packaging. You may need your smartphones calculator to work out prices per tablet or per gram, but its worth the effort.

Some health supplement makers have been dropping prices lately amid intense competition.

PET PRODUCTS

Jarratt says pet supply stores offer food, litter and other items in bulk packaging that can be much cheaper than the smaller versions.

Shop around and make sure you are getting a better buy. Costco operates on that basis things there are available in much bigger quantities.

CLEANING PRODUCTS

The cleaning products aisle at the supermarket is an expensive place to buy these items. Hardware warehouses and cleaning product wholesalers offer larger and cheaper bulk purchases.

Lippey says wholesalers will sell to retail customers. Google wholesale cleaning supplies every region has them. Its where cleaners get their supplies. They dont want fancy labels, they just what a product that works, she says.

MEAT

Lippey says you can halve your households meat bill by asking butcher about buying in bulk, then storing the portions in a chest freezer at home. Youll get many cuts of the cow so may need to do some research about recipes, she says.

Meat in a chest freezer is a massive saving. Its one of the few ways you can spend to save money

Twitter: @keanemoney