Bayer and Monsanto's $88bn deal could change the future of agriculture

One of the world’s biggest agriculture conglomerates is set to be created, with the announcement that German chemical company Bayer will purchase US seed company Monsanto in an $88 billion deal that could change the future of global food supply.

The acquisition signals a greater focus by Bayer on its agriculture business, which currently produces farming chemicals, crop supplies, herbicides and pesticides. As the world’s largest supplier of genetically modified seeds, Monsanto is a key — and sometimes controversial — player in the push for farmers to produce higher yields from fewer resources.

Announcing the agreement, negotiations for which began in May 2016, Hugh Grant, chairman and chief executive officer of Monsanto, said the combined might of the two companies would deliver solutions for a new era in agriculture.

“This combination with Bayer will deliver … 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,” said Grant.

Liam Condon, member of the board of management of Bayer AG and head of the Crop Science Division, said a new approach was required to tackle the global challenge of feeding an additional 3 billion people in the world by 2050 in an environmentally sustainable way. He said both companies were committed to systematically integrating expertise across seeds, traits and crop protection, including biologicals, alongside investment in innovation and sustainable agriculture practices.

The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St Louis, Missouri, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, as well as other locations throughout the US and around the world. The Digital Farming activities for the combined business will be based in San Francisco, California.