University of Illinois Urbana-Champaign

The Monsanto - Bayer acquisition case, factors that influence M&A premiums, a teaching case study

Bort, Guillermo Hernan

This item is only available for download by members of the University of Illinois community. Students, faculty, and staff at the U of I may log in with your NetID and password to view the item. If you are trying to access an Illinois-restricted dissertation or thesis, you can request a copy through your library's Inter-Library Loan office or purchase a copy directly from ProQuest.

Permalink

https://hdl.handle.net/2142/121373

Description

Title
The Monsanto - Bayer acquisition case, factors that influence M&A premiums, a teaching case study
Author(s)
Bort, Guillermo Hernan
Issue Date
2023-07-19
Director of Research (if dissertation) or Advisor (if thesis)
Goldsmith, Peter M
Committee Member(s)
  • Paulson, Nicholas D
  • Schnitkey, Gary D
  • Blumthal, Meredith
Department of Study
Agr & Consumer Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
M.S.
Degree Level
Thesis
Keyword(s)
  • M&A premium
  • Hubris Theory
  • Agricultural inputs industry
  • Factors influencing M&A premium
Abstract
During the past decade, the merger of Dow with Dupont/Pioneer, the acquisition of Syngenta by Chem-China, and the acquisition of Monsanto by Bayer have reshaped the global agricultural input sector, signaling the final stages of a long process of market concentration. Increasing complementarities among companies involved with seeds, biotechnology, crop protection chemicals, and biological products drove this process as agricultural production was increasingly viewed as a complex and integrated system. These large and complex M&As received intense media coverage, price premium being a major highlight of widespread attention. I examined the literature about what determines price premiums, the multiple strategic and financial factors in play when a large acquisition is decided and explored different approaches to understand what drives an acquisition decision and whether they create or destroy value for shareholders. I focused my study on the Monsanto acquisition by Bayer and created a case study with accompanying teaching notes to discuss the main factors contributing to an acquisition decision and determining acquisition premium. I identified three main sets of factors: a) macro factors: related to culture, industry trends, acquisition waves, R&D-focused investments and expectations of future technology developments; b) enterprise factors: connected with competitive strategy, firm size, firm ownership structure, mode of payment and financial performance; and c) managerial factors: where management ownership, principal-agent theory and hubris theory come into play. The Monsanto/Bayer case study created here presents a unique learning opportunity to discover the complex decision-making process of a large acquisition and exposes students to a holistic approach combining qualitative and quantitative elements to form a solid opinion about the drivers of a major M&A in agribusiness.
Graduation Semester
2023-08
Type of Resource
Thesis
Copyright and License Information
Copyright 2023 Guillermo Bort

Owning Collections

Graduate Dissertations and Theses at Illinois PRIMARY
Graduate Theses and Dissertations at Illinois