Bayer, Monsanto Come To Terms, Deal Creates Another Major Giant Ag Company

By Chris Clayton
DTN Ag Policy Editor

Omaha (DTN) – Bayer and Monsanto announced they had come to terms on a merger with Bayer acquiring Monsanto for $128 a share in an all-cash transaction.
The boards for both companies unanimously approved the agreement.
With Monsanto’s 442 million outstanding shares, the $128-a-share deal equates to $56.6 billion in cash for shareholders, but Monsanto also reported $9.3 billion in debt. That puts the deal value at just under $66 billion.
“We are pleased to announce the combination of our two great organizations,” said Werner Baumann, CEO of Bayer AG, in a news release. “This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven life-science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large.”
The Germany-based Bayer initially offered $122 a share in May and came back with a $125 a share offer in July. Bayer increased the offer to $127.50.
Bayer operates in several industries, but Monsanto is largely an agricultural company. Combined agricultural sales last year from the two companies equaled roughly $25.8 billion.
Bayer also noted that once the transaction is completed and the two companies are combined “synergies” over the next three years would lead to roughly $1.5 billion in savings.
The deal announced Sept. 14 will add significant scrutiny to rapid merger and consolidation moves in the seed, biotechnology and chemical industries. Bayer-Monsanto’s deal follows the Dow-DuPont merger announced at the end of 2015 and the ChemChina purchase of Syngenta announced earlier this year. Effectively, with BASF on the outside looking in, the “Big Six” ag seed-and-chemical companies will quickly become the “Big Four.”
Bayer noted in its news release that the sale closing would be at the end of 2017. However, if the sale is squashed by regulators in the U.S. or Europe, Bayer has committed to a $2 billion breakup fee.
The U.S. Department of Justice has remained quiet on the seed-and-chemical mergers, but the U.S. Senate Judiciary Committee has a hearing scheduled on the topic.
Bayer stated the merger “brings together two different, but highly complementary businesses.” Monsanto’s work in seed, traits and climate technology will marry with Bayer’s crop protection products across a variety of crops and key growing areas around the world. The result, the companies stated, is that “growers will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, digital agriculture, and crop protection.”
Additionally, the merged company will combine a research and development budget of roughly $2.8 billion. Bayer said the companies will be able to “accelerate innovation” and provide farmers with more optimal analytics and agronomy solutions to improve yields and sustainability.
“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow. Together Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers,” said Hugh Grant, president and CEO of Monsanto.

Merger Creates Wall Street’s Largest Farmland REIT

By Marcia Zarley Taylor
DTN Executive Editor

Haddonfield, N.J. (DTN) – Farmland Partners Inc. CEO Paul Pittman created shockwaves with the purchase of 22,300 acres of Illinois farmland earlier this year, the state’s largest single purchase ever. The institutional investor’s spree in U.S. farmland continued, as Pittman’s company announced it was merging rival American Farmland Company (NYSE: AFCO) into its cropland kingdom.
While still modest in size for a New York Stock Exchange-traded REIT, the merger will create the largest U.S. farmland real estate investment trust (REIT) “by miles,” Pittman told DTN in an interview.
When the deal is completed later this year, the combined entity will own $850 million of prime U.S. farmland assets spanning 133,000 acres spread over 16 states and 25 major crop types. Gladstone Land (Nasdaq: LAND), with a value of about $350 million, is next in line, but both REITs are dwarfed by mutual fund companies like TIAA-CREF and insurance companies like Prudential who manage billions of dollars of U.S. farmland for investors.
Farmland Partners’ latest move represents $500 million in farm real estate acquisitions in the past 12 months. The firm expects to continue its rapid pace of growth, in part because it needs a multi-billion scale to carry the overhead of a publicly-traded firm. It also has been successful in attracting farmland owners who are willing to trade their land for stock in the company, receiving tax benefits and diversifying their geography in the process. Such trades mean cash doesn’t need to trade hands.
Outside of agriculture, REITs have become a fixture of real estate investing during the past 20 years. It’s a way to bundle trillions of dollars in apartment complexes, shopping centers and commercial real estate and pay public investors a share of rents. By law, REITs must distribute 90% of their earnings to shareholders. On average, that’s meant dividends of about 4% lately, not counting appreciation in the overall stocks. However, as the Federal Reserve raises interest rates, many market analysts expect REITs’ attraction to slide.
Agriculture’s economic slump also poses a threat to farmland REITs, as some tenants will have significantly reduced resources to pay rents after three years of losses. According to USDA, corn revenues have plunged 38% since 2012.
However, Pittman thinks such setbacks are temporary and remains bullish on U.S. farmland long term. “Global food demand is in scarcity,” he said. “These low prices are laying the foundation of [higher] demand every day. Demand once there, doesn’t go away; just look at what’s happening to soybean exports and corn exports. The markets are working... We won’t have perfect weather every year. Sometime, whether it’s next year or five years from now, we’ll be talking about how did the corn price get so high again?”
Investor interest in farmland soared during grain market highs over the past decade. But American Farmland’s stock has been undervalued since its public launch, trading about $6 per share when its underlying assets were worth $9 per share, Pittman said. He said the firm’s assets were sound, but the company was too small and carried too much overhead.
Until now, Farmland Partners (NYSE: FPI) concentrated on acquiring row-crop farms that raised corn, soybeans, wheat and cotton, largely in the Midwest, Plains and Delta. American Farmland’s smaller portfolio specialized in permanent crops such as almonds and oranges. The combined entity will consist of approximately 75% row-crop farmland and 25% specialty crops by value. Farmland Partners expects to consolidate American Farmland’s operations into its existing Denver-based headquarters and realize significant cost savings by trimming administrative and overhead costs.

Judge OKs Oil Pipeline Builder Will Not Work Yet In North Dakota

(Dow Jones) – A federal judge said Sept. 9 that construction on a $3.8 billion four-state oil pipeline can proceed, handing an apparent defeat to the Standing Rock Sioux tribe and other opponents of the project.
But in an unusual move, three federal agencies immediately announced that they would ask the pipeline’s builder to voluntarily halt pipeline work in a contested area in North Dakota.
The U.S. Army Corps of Engineers said it wouldn’t authorize construction near Lake Oahe, an important site to the tribe, until the agency determines if it needs to reconsider its previous approvals under a federal national historic preservation law.
“This case has highlighted the need for a serious discussion on whether there should be nationwide reform with respect to considering tribes’ views on these types of infrastructure projects,” the Corps, Justice and Interior departments said in a joint statement.
A spokeswoman for Energy Transfer Partners LP, which is building the pipeline with an affiliate company, declined to comment on the judge’s ruling. Phillips 66, the refiner, owns 25%.
David Archambault II, chairman of the Standing Rock Sioux tribe, didn’t immediately comment on the court ruling or statement by the federal agencies.
U.S. District Judge James Boasberg said in a 58-page opinion issued that he wouldn’t grant an injunction sought by the tribe because he didn’t agree that the federal government failed to consult with the tribe as required by law and that the pipeline would cause irreparable harm to the tribe’s heritage.
“Aware of the indignities visited upon the tribe over the last centuries, the court scrutinizes the permitting process here with particular care,” Judge Boasberg wrote. “Having done so, the court must nonetheless conclude that the tribe has not demonstrated that an injunction is warranted here.”
The tribe, which has led months of increasingly tense protests against the pipeline, sued the U.S. Army Corps of Engineers in July in federal court in Washington, D.C., to block the pipeline. The tribe argued that the agency improperly authorized the project, which it said threatened the tribe’s drinking water and culturally important sites.
The pipeline has drawn national attention and become another flashpoint in the broader fight over drilling for and transporting crude oil. Clashes between protesters and police at a site in North Dakota have escalated in recent weeks, with protesters chaining themselves to equipment and both sides alleging that the other was provoking violence.
As with the Keystone XL Pipeline, which would have carried crude oil from Canada to the Gulf Coast but was blocked by President Barack Obama last fall, opponents have linked the Dakota Access Pipeline to climate change and risks to drinking water.
Last month, 31 environmental groups asked the president in a letter to intervene again and repeal the permits for the pipeline. The pipeline’s backers, meanwhile, say it will reduce the potential for accidents by cutting the amount of crude oil that travels by train.

Direct Receipts

Direct Receipts: 36,000

Texas 20,400. 91 pct over 600 lbs. 30 pct heifers. Steers: Medium and Large 1 FOB Current 655-675 lbs 136.96; 750-775 lbs 132.71; 800 lbs 131.11; 875 lbs 123.50; 920 lbs 124.50; Oct 750 lbs 134.08; Nov 675 lbs 129.90; 700 lbs 127.47; 750-775 lbs 126.83; 800 lbs 121.90; Dec 750 lbs 124.00; Del Current 700 lbs 138.00; 750-775 lbs 133.38; Oct 800 lbs 135.50; Nov 650 lbs 137.20; 700 lbs 131.80; 750 lbs 127.50; Dec 725 lbs 131.35; 750 lbs 126.90; Jan 700-725 lbs 129.91; 750 lbs 126.00. Medium and Large 1-2 FOB Current 625 lbs 136.50; 695 lbs 132.49; 725 lbs 129.44; 765-780 lbs 129.63; 800-810 lbs 126.60; 850 lbs 122.95; 925 lbs 122.90; Oct 750 lbs 128.00; 800 lbs 122.90; Nov 750 lbs 119.25; Del Current 600 lbs 153.00; 655 lbs 122.00 Mex; 725 lbs 137.43; 775 lbs 127.00; 800 lbs 127.60; 855-875 lbs 123.40; Oct 680 lbs 140.00; Nov 725 lbs 129.69. Heifers: Medium and Large 1 FOB Current 665-690 lbs 128.23; 700 lbs 123.90; 750 lbs 127.00; Nov 675 lbs 125.01; 700-725 lbs 120.27; Del Current 700 lbs 126.50; Nov 650-675 lbs 126.88; 700-725 lbs 123.57; Dec 700 lbs 118.25; Jan 700 lbs 118.44. Medium and Large 1-2 FOB Current 590 lbs 129.75; 675 lbs 130.60; 750 lbs 127.00; Del Current 500-525 lbs 148.81; 585 lbs 148.81; 675-690 lbs 128.93; 765-775 lbs 119.63; Oct 600 lbs 137.00; 680 lbs 132.00; Nov 600 lbs 137.00; 725 lbs 121.25; Dec 700 lbs 118.25.

Oklahoma 3500. 98 pct over 600 lbs. 22 pct heifers. Steers: Medium and Large 1 Current 750-775 lbs 132.21; 825 lbs 127.50; 875-885 lbs 129.30; Jan 700 lbs 124.20; Sept 765 lbs 129.90; Oct 700 lbs 135.00. Heifers: Medium and Large 1 Current 585 lbs 131.83; 625 lbs 137.90; 750 lbs 131.30.

New Mexico 1300. 100 pct over 600 lbs. 7 pct heifers. Steers: Medium and Large 1 Current 775-790 lbs 133.06; 825 lbs 126.50. Medium and Large 1-2 Current 750 lbs 132.51; 800 lbs 128.01; 875 lbs 123.44; Oct 680 lbs 138.76; 800 lbs 135.13. Medium and Large 1-2 Current 775 lbs 118.63; Oct 680 lbs 130.76.

Kansas 3600. 100 pct over 600 lbs. 35 pct heifers. Steers: Medium and Large 1 FOB Current 750 lbs 138.00; 800 lbs 130.00; 860 lbs 126.00; 910-930 lbs 126.05; Jan 750 lbs 123.00. Medium and Large 1-2 FOB Current 815 lbs 131.00; 850 lbs 123.25; Del 800-815 lbs 129.99; 850-855 lbs 126.60; Nov 750 lbs 123.50. Heifers: Medium and Large 1 FOB 670 lbs 134.00; 750-775 lbs 127.28; 825 lbs 121.00; Nov 700 lbs 122.00; Del Current 625 lbs 140.00.

National Feeder Cattle Summary

St. Joseph, MO — September 16
National feeder cattle receipts: 153,300

Feeder steers and heifers sold mostly steady to $3 higher, with instances $5-7 higher. Most advances were posted late in the week for feeders as cattle futures saw triple digit gains. Steer and heifer calves traded steady to $3 lower. Receipts increased as your sale barns were back on schedule after the holiday break. There was optimism as the CME live and feeder cattle futures had a three day rally, with live cattle closing on Sept. 16 at $107.87, up 92 points and feeder cattle at $133.25, up $1.55 on the October contract. A number of producers were cautious and stayed on the sidelines to see how the market would react after last week’s losses. Some of the highest cattle in the country sold on Sept. 14 at the St Joseph Stockyards with a string of steers weighing 746 lbs selling at $154.25 and a part load weighing 760 lbs selling at $153.25. In Ogallala, NE on Sept. 15 a consignment of 811 lb yearling steers brought $150.50. In the slaughter cattle arena the mood among producers was subdued as they proceeded with caution, given tough state of the market the past few weeks. Trade broke early Sept. 16 morning with talks of $170 dressed bids. As the morning and afternoon went on the trade developed into something feeders could smile about.In the southern plains live sales sold $5 higher at $110. In the Northern Plains live sales sold $3-5 higher from $108-110. Dressed sales sold $4 higher $170. Packers have been very diligent in staying current to avoid backing into a corner. Some are hoping for higher money next week as some are holding onto a few pens just to test the market despite very good buyer inquiry. Cool temperatures moved in across the Plains and Midwest making it feel more like fall. However, temperatures are expected to warm up in the 80’s. Such swings in temperature is always a concern, as it may make calves sick. Heavy rain also fell early on dumping anywhere from a few inches up to 11 inches, curtailing receipts in the affected regions. More moisture is expected throughout the weekend causing more havoc in saturated areas. Farmers in the southern Midwest have gotten an early start on the corn harvest, however, were delayed due to moisture. With the new crop season here, farmer feeders will begin to concentrate more on harvesting corn and soybeans.

Texas 5300. 43 pct over 600 lbs. 38 pct heifers. Steers: Medium and Large 1 pkg 335 lbs 178.00; 400-450 lbs (419) 158.20; 450-500 lbs (486) 147.28; 500-550 lbs (532) 142.12; 550-600 lbs (569) 137.97; 600-650 lbs (626) 130.01; 650-700 lbs (656) 129.71; 700-750 lbs (720) 132.71; 750-800 lbs (776) 133.39; pkg 830 lbs 129.50; 950-1000 lbs (959) 123.71. Medium and Large 1-2 300-350 lbs (360) 158.96; 400-450 lbs (438) 154.22; 450-500 lbs (490) 149.46; 500-550 lbs (525) 131.77; 550-600 lbs (577) 131.38; 600-650 lbs (626) 121.48; 650-700 lbs (675) 129.20; 750-800 lbs (785) 131.73. Heifers: Medium and Large 1 300-350 lbs (330) 147.36; 400-450 lbs (428) 134.11; 450-500 lbs (473) 132.91; 500-550 lbs (522) 128.68; 550-600 lbs (570) 122.26; 600-650 lbs (633) 120.82; 650-700 lbs (664) 127.54; 700-750 lbs (712) 113.13; 850-900 lbs (879) 116.83; part load 935 lbs 117.75; 950-1000 lbs (960) 105.39. Medium and Large 1-2 300-350 lbs (314) 147.36; 350-400 lbs (391) 139.01; 400-450 lbs (418) 134.65; 500-550 lbs (529) 115.81; 550-600 lbs (575) 111.53; 600-650 lbs (604) 120.20; 650-700 lbs (675) 106.81; 700-750 lbs (713) 101.70; 750-800 lbs (774) 122.72.

Oklahoma 22,900. 49 pct over 600 lbs. 45 pct heifers. Steers: Medium and Large 1 300-350 lbs (320) 170.69; 350-400 lbs (371) 162.53; 400-450 lbs (426) 157.35; 450-500 lbs (471) 145.81; 500-550 lbs (520) 138.75; 550-600 lbs (571) 133.68; 600-650 lbs (621) 133.71; 650-700 lbs (681) 136.34; 700-750 lbs (726) 138.22; 750-800 lbs (768) 135.87; 800-850 lbs (820) 132.62; 850-900 lbs (879) 126.73; 950-1000 lbs (967) 120.35; 1000-1050 lbs (1005) 117.86; 1050-1100 lbs (1057) 119.45. Medium and Large 1-2 350-400 lbs (374) 161.37; 400-450 lbs (426) 146.06; 450-500 lbs (472) 137.03; 500-550 lbs (535) 134.80; 550-600 lbs (571) 129.63; part load 650 lbs 129.00; 650-700 lbs (669) 131.16; 700-750 lbs (721) 129.23; 750-800 lbs (781) 127.53; 800-850 lbs (832) 126.30; 850-900 lbs (860) 127.01; 900-950 lbs (931) 119.80. Heifers: Medium and Large 1 300-350 lbs (331) 146.75; 350-400 lbs (378) 140.27; 400-450 lbs (424) 133.97; 450-500 lbs (471) 128.37; 500-550 lbs (524) 128.17; 550-600 lbs (569) 128.03; 600-650 lbs (619) 129.82; 650-700 lbs (676) 127.14; 700-750 lbs (714) 129.96; 750-800 lbs (767) 125.19; 800-850 lbs (835) 122.36; 850-900 lbs (866) 119.45; 900-950 lbs (917) 112.49; 1000-1050 lbs (1009) 113.82. Medium and Large 1-2 300-350 lbs (336) 142.36; 350-400 lbs (375) 133.39; 400-450 lbs (435) 125.20; 450-500 lbs (479) 122.04; 500-550 lbs (521) 119.08; 550-600 lbs (564) 116.95; 600-650 lbs (635) 117.81; 650-700 lbs (688) 124.12; 700-750 lbs (735) 96.27; 750-800 lbs (762) 122.49; 800-850 lbs (820) 119.87; load 855 lbs 119.50.

New Mexico 3500. 23 pct over 600 lbs. 49 pct heifers. Steers: Medium and Large 1 350-400 lbs (372) 175.11; 400-450 lbs (426) 158.63; 450-500 lbs (486) 147.08; 500-550 lbs (520) 139.10; 550-600 lbs (574) 130.00; 600-650 lbs (606) 133.25; 750-800 lbs (770) 127.19. Medium and Large 1-2 350-400 lbs (375) 158.70; 400-450 lbs (421) 151.25; 450-500 lbs (478) 145.43; 750-800 lbs (784) 123.79. Heifers: Medium and Large 1 350-400 lbs (386) 144.93; 400-450 (433) 141.30; 450-500 lbs (472) 129.00; 500-550 lbs (531) 124.83; 550-600 lbs (571) 123.73; 800-850 lbs (826) 114.20. Medium and Large 1-2 450-500 lbs (465) 126.63; 500-550 lbs (516) 119.57.

Kansas 7300. 93 pct over 600 lbs. 35 pct heifers. Steers: Medium and Large 1 400-450 lbs (429) 167.83; 500-550 lbs (521) 160.43; 550-600 lbs (572) 150.91; 600-650 lbs (630) 142.26; 650-700 lbs (688) 147.17; 700-750 lbs (730) 139.94; 750-800 lbs (761) 136.36; 800-850 lbs (826) 134.86; 850-900 lbs (872) 133.40; 900-950 lbs (910) 132.50; 950-1000 lbs (975) 126.68. Medium and Large 1-2 500-550 lbs (525) 148.65; 600-650 lbs (610) 139.18; 650-700 lbs (684) 137.06; 700-750 lbs (717) 132.88; 750-800 lbs (794) 132.15; 800-850 lbs (833) 129.45; 850-900 lbs (884) 127.50; 900-950 lbs (940) 127.53. Heifers: Medium and Large 1 450-500 lbs (483) 139.78; 550-600 lbs (574) 135.73; 600-650 lbs (609) 134.08; 650-700 lbs (670) 132.88; 700-750 lbs (734) 125.82; 750-800 lbs (764) 128.97; 800-850 lbs (819) 124.60; 850-900 lbs (865) 123.65; 900-950 lbs (922) 120.99; 950-1000 lbs (965) 117.47. Medium and Large 1-2 500-550 lbs (531) 132.51; 550-600 lbs (573) 128.69; 700-750 lbs (740) 126.50.

Missouri 22,600. 45 pct over 600 lbs. 43 pct heifers. Steers: Medium and Large 1 300-350 lbs (322) 166.79; 350-400 lbs (370) 160.02; 400-450 lbs (427) 158.75; 450-500 lbs (476) 150.27; 500-550 lbs (524) 145.60; 550-600 lbs (575) 141.60; 600-650 lbs (622) 142.27; 650-700 lbs (673) 139.27; 700-750 lbs (722) 136.73; 750-800 lbs (778) 130.67; 800-850 lbs (823) 132.34; 850-900 lbs (881) 125.14; 900-950 lbs (939) 127.32. Medium and Large 1-2 300-350 lbs (321) 150.64; 350-400 lbs (376) 156.27; 400-450 lbs (425) 147.60; 450-500 lbs (481) 140.65; 500-550 lbs (524) 137.31; 550-600 lbs (571) 134.06; 600-650 lbs (627) 136.95; 650-700 lbs (680) 133.86; 700-750 lbs (724) 133.80; 750-800 lbs (768) 127.97; 800-850 lbs (820) 125.39; 850-900 lbs (869) 121.74; 950-1000 lbs (988) 113.90. Holsteins: Large 3 400-450 lbs (432) 89.76; 450-500 lbs (481) 97.06; 550-600 lbs (558) 89.16; 600-650 lbs (624) 86.66; 650-700 lbs (666) 86.06; 750-800 lbs (787) 84.19; load 975 lbs 90.25. Heifers: Medium and Large 1 300-350 lbs (322) 145.51; 350-400 lbs (374) 139.32; 400-450 lbs (422) 137.42; 450-500 lbs (477) 130.63; 500-550 lbs (524) 127.96; 550-600 lbs (567) 126.95; 600-650 lbs (618) 129.08; 650-700 lbs (665) 128.28; 700-750 lbs (723) 128.20; 750-800 lbs (770) 121.78; 800-850 lbs (829) 122.72; 850-900 lbs (855) 120.19; 900-950 lbs (925) 110.45. Medium and Large 1-2 300-350 lbs (335) 139.12; 350-400 lbs (383) 133.09; 400-450 lbs (424) 124.71; 450-500 lbs (476) 123.83; 500-550 lbs (526) 122.09; 550-600 lbs (568) 119.29; 600-650 lbs (670) 123.16; 700-750 lbs (725) 119.68; 750-800 lbs (772) 117.94; 800-850 lbs (874) 117.69.

Arkansas 5100. 23 pct over 600 lbs. 34 pct heifers. Steers: Medium and Large 1 300-350 lbs (323) 165.49; 350-400 lbs (373) 153.72; 400-450 lbs (426) 144.86; 450-500 lbs (470) 138.81; 500-550 lbs (523) 131.60; 550-600 lbs (570) 126.36; 600-650 lbs (619) 123.92; 650-700 lbs (674) 121.80. Heifers: Medium and Large 1 300-350 lbs (324) 141.08; 350-400 lbs (373) 135.00; 400-450 lbs (428) 125.30; 450-500 lbs (473) 122.57; 500-550 lbs (521) 118.39; 550-600 lbs (568) 117.80; 600-650 lbs (625) 114.61; 650-700 lbs (672) 111.27.

 

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Monday, September 26, 2016 3:27 PM