German conglomerate Bayer on Thursday closed its $63 billion merger with Monsanto after getting the required nod from U.S. and EU regulators.
The closing sets the stage for the 117-year-old agribusiness brand name "Monsanto" to be dropped by Bayer. Monsanto's efforts to promote genetically modified crops have been the subject of much controversy from anti-GMO activists, and the U.S. company has spent millions of dollars over the years on brand and corporate ad campaigns to improve its overall image.
"Monsanto is kind of the poster child for a larger movement against GMO," said Kathryn Paul, associate director of the Organic Consumers Association, a consumer advocacy organization and longtime critic of Monsanto. The nonprofit also has a pending lawsuit against the company's Roundup herbicide brand.
In a statement issued Thursday, Monsanto said: "We're extremely proud of all we've accomplished as Monsanto, and are eager to continue to accelerate innovation in agriculture as we look forward to a future under Bayer."
A spokesperson for St. Louis-based Monsanto said in an email: "There will be no branding changes today. Monsanto will operate independently from Bayer for an interim period while Bayer completes the sale of some of its businesses to BASF. During this time, it will be business as usual for us, including our company name."
A key condition of U.S. Department of Justice approval of the Bayer-Monsanto deal was the German pharmaceutical and pesticide giant divesting some of its crop science assets. The divestitures of those businesses is expected to take approximately two months to close.
"Bayer will remain the company name," the German company said this week. "Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio."
Monsanto's key brands include Roundup, DeKalb, Acceleron, Asgrow, Seminis and Deltapine. Its Roundup product — introduced in the 1970s — is the world's top-selling herbicide.
"The speed at which they're looking to do away with the Monsanto brand speaks volumes in that traditionally you have a slow burn in many cases," said Aaron Perlut, managing partner of Elasticity, a St. Louis-based consulting firm specializing in brand reputation management. He said big mergers typically have a transition period of a year or two before there are major changes of this scale.
"It seems like this is much more hastened than normally we would see, particularly at this scale of an acquisition," Perlut said.
Last week, Bayer trimmed its synergy target for Monsanto from $1.5 billion to $1.2 billion but said it still expects the American company to generate a positive contribution to core EPS starting next year. Monsanto employs more than 22,000 people worldwide.
Monsanto's agricultural biotechnology research and development operations that are going to Bayer are the largest in the world and include making genetically modified seeds for such crops as corn, soybeans and cotton. Corn represented almost 60 percent of Monsanto's total seed and genomics business last year.
"The entire business is essentially going over to Bayer intact," said Morningstar analyst Seth Goldstein. "Taking away the Monsanto name is more of a branding. It should allow for easier PR for Bayer."
The annual Harris Poll of corporate reputation ratings among America's "100 most visible companies" has regularly shown Monsanto rank toward the lower end of the list. Monsanto ranked 97 on the list of 100 companies in 2017 and survey results this year put it at 95.
In the past decade, Monsanto has spent upwards of $100 million in some years in advertising costs, including national campaigns aimed directly at consumers and improving the Monsanto brand image. Some of the corporate efforts have been in direct response to social media attacks against genetically modified seeds as well as Monsanto's fight against states creating GMO labeling laws.
At the same time, there have been anti-Monsanto protests over the years in dozens of countries over the company's GMO seed technology and its Roundup herbicide product containing glyphosate that is used to control weeds. While Monsanto insists "glyphosate has a long history of safe use," the International Agency for Research on Cancer classified glyphosate as "probably carcinogenic" back in 2015.
Monsanto's image also has been affected over the years by reports it has chased down more than 100 farmers since the late 1990s for alleged violations of its patented seeds, including growers who have saved seeds for replanting.
"It's not a surprise Bayer is dropping the Monsanto name since the brand has so many issues and there was international rejection of GMOs," said Andrew Kimbrell, executive director of the Center for Food Safety, a group that has filed several legal cases against Monsanto.
Kimbrell added that Bayer should "be careful" because consumer advocacy groups such as CFS will be watching to see how the new owner operates.
Indeed, brand experts say Bayer likely will have more attention on it from outside groups and even the farm community given its size and the history of Monsanto.
"There's going to be the expectation of a tremendous amount of accountability and transparency that perhaps some audiences did not believe was part of the Monsanto value proposition," said Perlut. "I think they [Bayer] need to be prepared for groups, including farmers, that have viewed the Monsanto brand in a very skeptical way over the past quarter of a century."