Bayer AG’s proposed mega deal to buy Monsanto Co. is likely to create a mega public relations challenge for the German company at home.
Bayer faces a backlash against Germany’s biggest planned acquisition because of two products from the St. Louis-based company that are widely detested in the country: genetically modified seeds and the weedkiller Roundup, which uses a compound called glyphosate that some believe can cause cancer.
“Germans view Monsanto as the main example of American corporate evil,” said Heike Moldenhauer, a biotechnology expert at German environmental group BUND. “It may not be such a good idea to take over Monsanto as that means incorporating its bad reputation, which would also make Bayer more vulnerable.”
A German Environment Ministry study released last month found 75 percent of citizens are against genetic engineering of plants and animals. Aware of voter suspicions, members of Chancellor Angela Merkel’s junior coalition partner, the Social Democrats, have already come out against the deal, which would turn Bayer into the biggest supplier of farm chemicals. Monsanto, which has a market value of $42 billion, said Thursday it’s studying the offer. Neither party has disclosed the terms.
A merger would “strengthen the economic power of genetic engineering in Germany, which we see as very problematic as the majority of the population in Germany is opposed to the technology,” said Elvira Drobinski-Weiss, the lawmaker responsible for formulating policy positions on genetic engineering for the Social Democrats.
BASF SE four years ago abandoned research into genetically modified crops in Germany, citing a lack of acceptance of the technology in many parts of Europe from consumers, farmers and politicians. The German company moved the unit to the U.S. and halted development of products targeted for Europe to focus on crops for the Americas and Asia.
“There’s virtually no market for genetically modified seeds in Europe because they’re so unpopular,” said Dirk Zimmermann, a GMO expert at Greenpeace in Hamburg. A deal combining Bayer and Monsanto would “hurt the future of sustainable agriculture.”
Bayer is no stranger to the public outcry that crop chemicals can cause and has been under fire itself for the use of two chemicals that some claim are responsible for the dying off of bees. The Leverkusen-based company has already enlisted two large PR firms to advise on the takeover and potential backlash, according to people familiar with the matter. Bayer declined to comment on its strategy.
Glyphosate is another product provoking heated debate in Germany, with many wary of the potential health impacts. Nine of 14 letters-to-the-editor published in Thursday’s Sueddeutsche Zeitung, one of the country’s biggest newspapers, dealt with glyphosate, most of them against the continued use of the herbicide.
Several German hardware store chains, including Hornbach Baumarkt AG, Obi and REWE Group’s Toom, stopped selling products using glyphosate last year in the wake of a report from the World Health Organization’s International Agency for Research on Cancer saying the weedkiller is probably carcinogenic. A joint position paper released this week by committees from the World Health Organization and United Nations disagreed with that assessment.
Merkel’s governing coalition is squabbling about whether to back reauthorizing the chemical’s use in the European Union when the current approval runs out in June. The chancellor and her agriculture minister support the continued use of the herbicide but many Social Democrats have come out against it, meaning the government hasn’t been able to take a position on the matter in EU discussions.
The opposition Green Party is against using glyphosate, said Renate Kuenast, Germany’s former agriculture minister and now head of the justice and consumer protection committee in parliament.
Bayer’s plan “is a wrong signal for Germany and environmental protection,” she said in an e-mail. “Monsanto stands for glyphosate and agricultural bio-engineering and thus for a loss of biodiversity and good soils. It’s a folly we need to stop.”
Originally Published: Bloomberg