The market seemed to anticipate hurdles for the Monsanto deal on Wednesday. Shares of the company closed about 20 percent lower than the $ 128 per share cash offer from Bayer, which is based in Leverkusen, Germany. Shares of each company gained less than 1 percent after the deal was announced.
Adding the assumption of about $ 10 billion of Monsanto debt, Bayer's total $ 66 billion pact is the largest all-cash deal, according to data compiled by Thomson Reuters, ahead of InBev's $ 60.4 billion offer for another St. Louis-based company, Anheuser-Busch, in June 2008.
Senator Charles E. Grassley, Republican of Iowa and chairman of the Judiciary Committee, scheduled a hearing next week to discuss the possible effect of these agriculture-related mergers on farming. Iowa produced more corn last year than any other state, according to the National Corn Growers Association.
"It seems to be catching fire and happening so fast with so many," Senator Grassley said in a phone interview. "When you have less competition, prices go up."
European competition regulators also said publicly, before a Bayer-Monsanto deal was even signed, that they would look at how it could affect prices and the availability of seed products, as well as research.
Liam Condon, who leads Bayer's crop-science division, said in an interview that the company did an "extensive analysis" with regard to antitrust before approaching Monsanto in May. Mr. Condon said that he does not believe there is much overlap between their portfolios, because Bayer's focus is largely on crop protection, while Monsanto's is on seeds and traits. He said the companies assume they may need to sell off some assets to appease regulators.
Monsanto, which is famous for its production of genetically modified seeds, rejected several offers from Bayer as too low. Wednesday's deal represented a 44 percent premium to Monsanto's stock price on May 9, the day before Bayer's interest in a deal surfaced. To assuage Monsanto's concerns, Bayer threw in a $ 2 billion breakup fee if the deal fell apart on antitrust grounds.
The strategic goal of the deal, according to Bill Selesky, an analyst at Argus Research, is to create a one-stop-shopping experience for farmers, making Bayer the world's largest supplier of seeds and farm chemicals. By improving the product for farmers, the combined company could ultimately raise prices, Mr. Selesky said in an interview.
Senator Grassley said that he had spoken with a few farmers who believed the deals were necessary so large agribusinesses could continue to absorb the costs of researching and developing products and getting government approval for them.
Monsanto C.E.O. on Bayer Deal
"Farmers are starving for innovation and this, through time, will bring better innovation to them," said Hugh Grant, chief executive of the American fertilizer maker.
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Bayer and Monsanto said they planned to cut about $ 1.2 billion worth of costs as part of the deal, helping to improve efficiency.
But Jim Benham of Versailles, Ind., the president of the Indiana Farmers Union, was not so optimistic. He blamed the rising costs of inputs — seeds, fertilizer and the like — for eating away at farmers' profit margins, and warned that consolidation will make it worse. Costs have already risen by double digits over the last four to five years, and the proposed Bayer-Monsanto merger could accelerate that.
"The merger is going to hurt the farmer," said Mr. Benham, who grows corn, soybeans and sometimes wheat on his 1,400-acre farm. "The more consolidation we have on our inputs, the worse it gets."
Mr. Condon of Bayer said that the company would not raise prices without providing more value to farmers.
"This is a highly competitive industry, and just increasing prices without having any additional advantage or benefit for growers won't go anywhere," he said. "It's up to us to show what we're offering will help farmers improve their return on investment."
Some farmers said the consolidation could even enable prices to fall.
Christine Hamilton manages a farm of more than 12,000 acres in Kimball, S.D., growing crops like corn and operating a ranch. She said that if the deal can pass the antitrust screening, then maybe it could actually help farmers.
"I understand how companies need to get bigger in order to be competitive," she said. "As we are in a low part of the cycle, anything that might have a chance of reducing our input prices would be great."
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