Although the deal makes strategic sense, not many investors have what it takes to see the deal go through.

Bayer’s approach for acquiring U.S. seed and pesticide giant Monsanto has triggered a backlash from one of the company’s top shareholder who has termed the move as “arrogant empire-building”.

The reaction could be better understood in the context of a fall of 8.2% in Bayer’s share price following the news of its proposed acquisition of Monsanto. John Bennett of Henderson Global Investors, has described the proposal as an “immediate destruction” of shareholder value.

On Thursday, Monsanto had disclosed that Bayer had made an unsolicited takeover bid in order to create the world’s biggest agricultural supplier.

Despite Bayer’s shares slipping from their position, on Friday, its shares surged back by 1.3% at 1329 GMT and even outperformed the 1.1% rise of the DAX index.

Bennett is said to be furious at this move since he was not consulted on the approach. He said the “fine work” of appointing Werner Baumann as the company’s CEO has been “ripped up”.

Bennett went on to add, “I had hoped that the days of such arrogant empire-building and ignorance of the actual owners of the business were at an end”.

Bayer did not immediately comment on the investor’s response.

Bennett’s reactions mark one of the most scathing attack yet on Bayer, as investors have in a chorus shown mostly discontent due to the sheer size of the proposed merger.

Markus Manns, the fund manager of Union Investment, said he was “sceptical” of the merits of the deal. Although he admitted to the inherent strategic value in the deal since adding the seed business would give value to Bayer’s chemical manufacturing units, however he felt the humongous size of the deal is likely to stretch Bayer’s finances.

“With a presumptive premium of 30 to 40 percent it would be quite a chunk,” said Manns, assuming the share to be steady at $90.

His concerns are also echoed by Maximillian Anderl, UBS GAM’s fund manager, who said he would prefer nil-premium merger or a joint venture.

Taking a more softer approach, Alistair Campbell, an analyst at Berenberg opined that although a merger with Monsanto was not entirely illogical, given the broader scope of Bayer’s strategy, however, there is every possibility that Bayer may have bitten off too much.

“It’s just a very (very) large deal,” said Campbell in a note to clients. “We have struggled to find investors who favor this transaction”.

Categories: HR & Organization, Strategy

Tags: Top, Bayer, chemicals, seeds, pesticides, manufacturer, Monsanto, Henderson Global Investors, UBS GAM, Berenberg,