Tag: M&A

Pharma giant Bayer has acquired St. Louis-based Monsanto. After months of negotiation, the German company went back to the bargaining table this week, and on Sept. 14 Monsanto’s board approved the $66 billion cash offer.

Radhakrishnan Gopalan, associate professor of finance at Washington University in St. Louis’ Olin Business School, said Monsanto had virtually no other choice.

“This is a great deal for Monsanto shareholders,” Gopalan said. “The board would have to be foolish to do anything other than accept the deal. The fact that it is all cash makes it very sweet.

Radha Gopalan

“Given the other mergers in the space — Syngenta-ChemChina, Dow-Dupont — the regulatory risk is slightly enhanced, and so the increase in the fee in case of the deal falling through is also good news.”

Gopalan said that while it remains to be seen how Bayer will recover the investment of the acquisition, Monsanto’s position was much more clear.

“In terms of Monsanto, the company has been going through a restructuring the past year or so, and the internal morale is low,” Gopalan said. “They have problems with their product lines and future growth opportunity also appears to be bleak. So this is a great deal for them.

“For St. Louis, we can only hope that the consolidation does not result in too many local job losses.”

PHOTO: Werner Baumann, CEO of Bayer AG and Hugh Grant, Chairman and Chief Executive Officer of Monsanto. Courtesy of Monsanto.

From the Bayer- Monsanto Sept. 14 News Release:

The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals. Closing is expected by the end of 2017. The companies will work diligently with regulators to ensure a successful closing. In addition, Bayer has committed to a USD 2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals.

Headquarters and Employees

The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St. Louis, Missouri, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, and an important presence in Durham, North Carolina, as well as many other locations throughout the U.S. and around the world. The Digital Farming activities for the combined business will be based in San Francisco, California.

The Finance Club is hosting a panel discussion on mergers and acquisitions Wednesday, April 27, 5:15-8:00 p.m in Bauer Hall, Room 240. The panel’s topic is “Leveraging Firm Expertise Through the Acquisition Process.”

Panelists include Mike DeCola, President & CEO of HBM Holdings,  Bob Dunn, Managing Director of Thompson Street Capital Partners and Tom Manenti, Chairman and CEO, MiTek Industries, Inc.

Register here.

As 2015 comes to a close it’s reported that M&A activity reached record levels, topping the previous record in 2007 by several hundred million dollars. Source: MarketWatch

At first blush, this feels good. However, when digging a little deeper, getting the deal done is the first half of the story, successfully integrating two businesses is the second and vital half. In fact, according to the book The M&A Paradox: Factors of Success and Failure in Mergers and Acquisitions by Yaakov Weber, Christina Oberg, and Shlomo Tarba:

Many research studies conducted over the decades clearly show that the rate of failures is at least 50 percent. In surveys conducted in recent years, the percentage of companies that failed to achieve the goals of the merger reached 83 percent. The primary reasons for failures is related to the fact that it is easy to buy but hard to perform an M&A. In general, many mergers and acquisitions are characterized by the lack of planning, limited synergies, differences in the management/organizational/international culture, negotiation mistakes, and difficulties in the implementation of the strategy following the choice of an incorrect integration approach on the part of the merging organizations after the agreement is signed.*

When integrating beyond the numbers, leadership becomes critical and it’s in this area many managers find themselves with some blind spots.

WashU’s Executive MBA curriculum provides an answer. Throughout the 20-month curriculum, students stretch and ultimately learn to see beyond what’s always been. Leadership Residency, a hallmark of the program, takes peer feedback to a whole new level and leaders emerge in powerful ways that many students have a hard time finding words to describe. The program helps professionals identify and eliminate ‘blind spots’ in business, and become systems thinkers—the connective tissue of any enterprise—with the courage to tear down organizational silos. And that’s critical in a successful integration of a merger/acquisition as well as in business and leadership in general.

Business without blind spots, an essential for aspiring leaders.

*Financial Times Press