Bayer bids $62 Billion for Monsanto

 Little more than a week ago it became known that Bayer was engaged in talks regarding a possible Monsanto acquisition. Today, news comes that, Bayer has offered an all-cash takeover bid of $62 billion for Monsanto in a deal that would create the largest agrichemical business in the world, valued at approximately $103 billion. The bid equals $122 per share and values Monsanto at 37% above its closing price on May 9, reports the Wall Street Journal.

The maneuver by Bayer comes after falling commodity prices created a wave of consolidations in the agrichemical and agri-inputs sector involving rivals, Dow Chemical, DuPont, and Syngenta. Bayer currently has a hand in the farming business, with the division accounting for €10.37 billion of its total sales of €46.3 billion last year, but the bulk of its focus has historically been on pharmaceuticals. The BBC reports that if the deal is successful, however, it would shift Bayer’s portfolio, making half its business derived from agriculture.

“The acquisition of Monsanto would be a compelling opportunity to create a global agriculture leader while reinforcing Bayer as a Life Science company with a deepened position in a long-term growth industry,” said Bayer’s chief executive Werner Baumann in a company statement. “Monsanto is a perfect match to our agricultural business. We would combine complementary skills with minimal geographic overlap.”

 The deal would bring together leading Seeds & Traits, Crop Protection, Biologics, and Digital Farming platforms. Specifically, the combined business would benefit from Monsanto’s leadership in Seeds & Traits and Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops, according to Bayer.

 Bayer’s newly appointed CEO, Werner Baumann, told CNBC’s Squawk Box that he is not anticipating any regulatory roadblocks hindering the completion of the deal, noting, “The beauty of this combination is that both businesses are highly complementary, and it’s very much a growth story that is behind the combination. The product portfolios complement each other perfectly. The regional fit is really great.”

 This offer marks the largest bid ever made by a German company after Daimler’s $38.6 billion bid made in 1998 for Chrysler, according to BBC.  Despite its size, Bayer states it will finance the bid through a combination of equity and debt including a share sale to cover approximately 25% of the total deal value, indicating a capital increase of about $15.4 billion Bayer’s chief financial officer, Johannes Dietsch told the Wall Street Journal.

 Bayer states that the expected cash flow generated after closing, as well as Bayer’s proven ability to de-leverage after large acquisitions would enable rapid leverage recovery post-acquisition, and that the consolidation would lift Bayer’s core earnings by a mid-single-digit percentage, with synergies valued at $1.5 billion after three years.

Advertisements

NOPA Crush Pace Slows

April soybean crush totaled 147.6 million bushels, according to the National Oilseed Processors Association (NOPA), the second largest April crush on record behind last year.

The crush pace slowed 5.8% from March and was 1.8% less than last year, but was in line with expectations.

Through the first eight months of the 2015-16 marketing year, NOPA crush is tracking 0.6% behind one year ago.

Perdue’s Proposed Pennsylvania Soybean Plant Gets DEP Approval

On May 6, Purdue secured approval for its proposed soybean plant in York County, Pennsylvania from the state’s Department of Environmental Protection (DEP), according to a company statement.

The approval brings the $60 million project closer to reality after the company has been working toward a go-ahead since first applying to begin construction in August 2012. It also clears the way for the company to finalize the purchase of the property from the Lancaster County Solid Waste Management Authority (LCSWMA).

Work on the plant is scheduled to begin in June of this year and be completed by September 2017 in time for the 2017 harvest. The facility is expected to be one of the most advanced of its kind due to the fact that it will be adjacent to the LCSWMA facility, which will be a provider of water and steam for processing.

There has been opposition to the livestock feed plant due to its use of hexane in its processing operations, which have been indicated to contribute to asthma and pulmonary issues, reports YDR. As part of the DEP’s approval plan, the plant must adhere to regulations limiting it to the maximum release of 208 tons of hexane per year with systems installed to monitor for leaks, and will be required to purchase 257 tons of emissions credits from other locations across Pennsylvania in accordance with federal environmental rules.

May 2016 USDA NASS Report … Fats and Oils: Oilseed Crushings, Production, Consumption and Stocks

The United States Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) on the second day of each month releases its report, “Fats and Oils: Oilseed Crushings, Production, Consumption, and Stocks.”

To view the entire May 2016 report, click here.

Report Highlights:

Soybeans crushed for crude oil was 4.99 million tons (166 million bushels) in March 2016, compared to 4.64 million tons (155 million bushels) in February 2016 and 4.81 million tons (160 million bushels) in January 2016. Crude oil produced was 1.94 billion pounds up 8 percent from February 2016 and up 4 percent from January 2016. Soybean once refined oil production at 1.40 billion pounds during March 2016 increased 8 percent from February 2016 and increased 14 percent from January 2016.

Canola seeds crushed for crude oil was 150 thousand tons in March 2016, compared to 138 thousand tons in February 2016 and 148 thousand tons in January 2016. Canola crude oil produced was 123 million pounds up 8 percent from February 2016 but down 2 percent from January 2016. Canola once refined oil production at 123 million pounds during March 2016 was up 6 percent from February 2016 but down 1 percent from January 2016. Cottonseeds crushed for crude oil was 143 thousand tons in March 2016, compared to 126 thousand tons in February 2016 and 132 thousand tons in January 2016. Cottonseed crude oil produced was 45.3 million pounds, up 18 percent from February 2016 and up 9 percent from January 2016. Cottonseed once refined oil production at 52.8 million pounds during March 2016 was up 21 percent from February 2016 and up 16 percent from January 2016.

Edible tallow production was 62.6 million pounds during March 2016, down 19 percent from February 2016 and down 30 percent from January 2016. Inedible tallow production was 287 million pounds during March 2016, up 2 percent from February 2016 and up 4 percent from January 2016. Technical tallow production was 92.7 million pounds during March 2016, down 21 percent from February 2016 but up 2 percent from January 2016. Choice white grease production at 113 million pounds during March 2016 increased 1 percent from February 2016 and increased 1 percent from January 2016.

Russia Becoming One of World’s Top Palm Oil Importers

The Russian food embargo and the devaluation of the ruble have driven up the price of milk fat and the cost of processing. In response, processors have been turning to palm oil as a substitute for milk fat, driving imports to nearly one million tons and making the country one of the top importers of the edible oil in the world.

 Russian palm oil imports increased 37% last year compared to 2014, as the country’s milk production fell by 2% according to data from the Russian State Statistical Service. Meanwhile, Russian cheese output increased by 33% indicating a high level of substitution. Indeed, a study by Rosselhoznadzor at the end of last year concluded that 78% of all cheese produced in Russia are compromised, with some samples containing no milk fat at all.

 The Russian government is considering imposing a duty of US$200 per ton on palm oil, however, it is believed that this plan is flawed and will negatively affect the market and increase the pace of inflation.

Study Finds Soy an Effective Antibacterial Agent

A new study conducted at the University of Guelph found that soy not only offers essential amino acids, protein, fiber, and calcium, but also has the ability to protect people from food-borne illnesses, reports CBC. Researchers found that soy can limit the growth of some bacteria such as listeria and pseudomonas better than chemical-based agents.

The human body needs certain beneficial strains of bacteria to properly digest and process food, and in contrast to antibiotic-based agents, compounds in soy are able to kill only the harmful bacteria, leaving the beneficial strains.

“Because of the selective specificity [by soy] towards inhibiting the pathogenic bacteria compared to beneficial bacteria, it will eliminate some of the health issues associated with the current synthetic-based food preservatives,” researcher Suresh Neethirajan told CBC.

The research team is also working on identifying the soybean varieties that are the most efficient at curbing bacterial growth so that growers can one day choose varieties toward this specific application.