Monsanto ‘Picks Its Battles’ by Nixing Deere Deal
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of the most important involved a troubled reader objecting to his quotes in one of my magazine articles. Now I don’t remember what exactly he was objecting to, but my then editor-in-chief told me not to sweat the issue and make the correction to the story.
“Remember to always pick your battles,” he reminded me. “This one isn’t worth fighting for.”
Thirty-plus years later, I still remember this lesson. And apparently, the folks over at Monsanto Co. adhere to this particular motto as well.
In early May, Monsanto informed the world that it was terminating its 2015 agreement with John Deere to sell the Precision Planting LLC business to the ag equipment giant. “We are deeply disappointed in this outcome as we remain confident the acquisition would have benefited our customers,” said John Deere’s John May, President, Agricultural Solutions and Chief Information Officer, of the deal’s demise.
Of course, the major reason this proposed deal ended up being nixed had less to do with the players involved — Monsanto, John Deere, and Precision Planting, respectively — and more to do with who was raising red flags over such an agreement being completed — a branch of the U.S. government. In August 2016, the Department of Justice (DOJ) indicated that it planned to legally oppose the deal, describing it as “anti-competitve,” among other concerns. For several months, both John Deere and Monsanto prepared to present their case to the DOJ that these assumptions were “flawed assessments of the marketplace.”
But in the end, instead of fighting against the DOJ, the people that run Monsanto decided to simply end the John Deere/Precision Planting deal and retain the asset for the time being.
And under the “picking your battles” heading, this seems to be a case of just that. In short, Monsanto remains primarily focused on getting the regulatory blessing from the U.S. government for its multi-billion merger with Germany-based Bayer. Seeking to appease one branch of the federal government and legislators while actively battling another one — the DOJ — in court probably didn’t make a whole lot of sense (or cents, in a manner of speaking) in the eyes of those executives looking to move the Bayer merger agreement forward.
According to most market watchers, the final regulatory approval for the Bayer-Monsanto deal should come by the end of 2017, providing both companies divest a few overlapping assets in the process. Precision Planting might still be sold at this time, but probably not before.
Until this date finally rolls around, I fully expect Monsanto to continue “picking its battles” to reach the ultimate goal of merging with Bayer.