Unlike companies that grow organically, most corporate giants form through mergers and acquisitions. They are burdened with the costs of debt and amortization of doubtful and unproductive assets called “goodwill.”
While insiders profit, customers and the public are left to suffer from monopoly prices, lack of innovation and the cannibalization of America’s jobs, industry and working capital.
“Purchase accounting”, transaction fees and public subsidies may allow insiders to reap fortunes, but they can’t make flawed businesses sound.
NOTE: story originally appeared on WSJ.com on November 17th, 2015
Monsanto Co.is discussing “every possible possibility” for consolidation in the seed-and-pesticide business, the company’s president said, as rivals weigh potential deals in the $100 billion industry.
Monsanto and other companies in the agricultural sector are weighing potential deals as a way to expand and slice costs as diminished crop prices have pressured earnings in the sector. Monsanto in August dropped a $46 billion takeover proposal for rival Syngenta AG which Syngenta repeatedly rejectedas undervalued and overly risky.
Brett Begemann, Monsanto’s president, wouldn’t elaborate on what potential deals Monsanto might pursue, and declined to comment specifically on whether it might rekindle its approach to Syngenta. He said Monsanto would remain “disciplined” in deciding whether to pursue any deal.
“We’re discussing every possible possibility, just like every other company is discussing,” said Mr. Begemann, speaking to reporters ahead of an investor event Tuesday. “Talking about and doing are two different things.”
He said he was “not surprised” by reports that Swiss-based Syngenta was discussing other possible tie-ups, separate from a deal with Monsanto.
“Others in the industry also recognize that too many R&D dollars are being spent for the size of the targets we are going after today,” Mr. Begemann said. “Oftentimes that leads to consolidation in any industry.”
Mr. Begemann said Monsanto remains confident in its core business, which the company continues to expect will more than double its 2014 full-year earnings per share by 2019.
The agro-giants dominate “Big Ag” and “Big Wildlife,” a coalition of universities, agencies, legislators and NGOs. Their destructive practices harm free markets, the environment, habitat, wildlife and our society. Allowing the giants to grow larger just super-sizes the problems.
A century ago Teddy Roosevelt passed laws to break up monopolies and trusts. These laws remain. If they were enforced, shareholders, employees, consumers and the public, as well as the environment, habitat and wildlife would benefit greatly.