Germany drugmaker Bayer's acquisition of Monsanto closed this week after a challenging two-year-long review process. Despite creating the world's largest seed and agricultural chemicals maker, the "highly competitive environment" will remain unchanged, Bayer CEO Werner Baumann told CNBC on Thursday.
What Happened
One of the biggest challenges facing the combined entity is satisfying its "very smart" customer base, Baumann said. Customers have multiple choices, including Syngenta, Corteva Agriscience or the "substantially strengthened" BASF, to which Bayer sold some of its agricultural assets as part of the merger.
Why It's Important
Bayer's Monsanto acquisition could give it an advantage over rivals, as it could innovate using 2.4 billion euros, or $2.84 billion, in R&D funding annually, Baumann said. The company expects to invest in seeds, biological and digital initiatives to generate "better yield, better quality and, frankly, a better environmental footprint."
What's Next
The "first, second and third priority" for Bayer is to integrate Monsanto's business into its own, Baumann said. Liam Condon, the president of Bayer's crop science division, has been tasked with leading a combined executive team that will feature a "balance" of executives from both legacy businesses.
While Bayer's European-listed stock is trading at a discount to its peers, Baumann expressed confidence that the investment community will develop greater confidence in the company, as any merger-related uncertainty has "gone away," he said.
"I'm absolutely certain our shareholder base [and] new shareholders who come in to the stock see the great value and growth that the company is going to provide going forward."
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