Bayer plans large R&D spending if Trump administration approves takeover of Monsanto

The executives who want to create the largest seed and ag chemical company in the world told President-elect Donald Trump that they would spend at least $16 billion over six years on agricultural research in the United States if regulators approve Bayer’s purchase of Monsanto. “This is an investment in the U.S. heartland,” the companies said, but the National Farmers Union said cozy deal-making would betray Trump’s campaign promises of “putting a stop to corporate mega-mergers.”

Stockholders of the companies have voted for the $57 billion acquisition, which needs approval from antitrust regulators in the United States and Europe. It and two other deals — the Dow-DuPont merger and ChemChina’s purchase of Syngenta — would reduce the “big six” of the seed and ag chemical sector to a “big three.”

In a joint statement, Bayer and Monsanto said their combination would “ensure that the United States retains a pre-eminent position as the anchor” of global agriculture. The new company expects to spend $16 billion over six years on agricultural research and development, “with at least half of this investment made in the United States. This is an investment in innovation and people that will create several thousand new high-tech, well-paying jobs after integration is complete.”

On an annual basis, the $16 billion in research would be $2.7 billion, said the Wall Street Journal. Monsanto has spent around $1.5 billion annually and Bayer $1 billion or slightly more, it said. Monsanto spearheaded development of genetically engineered crops. Bayer is one of the world’s leading pesticide producers.

Transition spokesman Sean Spicer said Bayer chief executive told Trump last week that he would keep all of Monsanto’s U.S. jobs and create at least 3,000 new high-tech jobs, reported the Journal. Monsanto chief executive Hugh Grant also took part in the meeting at Trump Tower. A transition team was not immediately available for questions.

The NFU, the second-largest U.S. farm group, said the “deal” between Trump and the companies “is deeply disturbing if it leads to an approval of the Bayer-Monsanto acquisition by the incoming Trump administration.” It urged Trump to stop “the endless string of mergers” because consolidation will mean less competition and higher prices for farmers. “Family farmers and rural communities came out in droves to support President-elect Trump and his campaign messaging of fighting the power structure, putting a stop of corporate mega-mergers and standing up for the little guy,” said NFU.

When the Bayer-Monsanto deal was announced last September, the companies said St. Louis, the home to Monsanto, would become the headquarters for the global “seeds and traits” wing and the North American commercial headquarters. The new statement reiterated those plans. The overall crop sciences headquarters for the combined company will be in Monheim, Germany, according to the September announcement.

Bernstein analyst Jeremy Redenius told CNBC the companies probably already are spending half of their research money in the United States and their total spending is close to the amount they presented to Trump. “Not an increase, but not substantiallly cutting,” he said.

To read the Monsanto and Bayer statement, click here.