Deals and IPOs

Monsanto's bad reputation raises questions over Bayer bid

Will the Bayer-Monsanto deal happen?

The German pharmaceutical and chemicals firm Bayer has outlined a mammoth bid for a U.S. firm beset by reputational issues.

Bayer has bid $122 per share for agri-giant Monsanto in an all cash deal that values the target company at $62 billion.

Simon Wadsworth, the Managing Director of reputation management firm Igniyte, told CNBC that Bayer is spending a lot to inherit a bad reputation.

"Monsanto has poor reputation online and Bayer will feel the impact of this by association when it becomes the parent company. There will be a knock-on effect of potential damage to sales and employee concerns."

Igniyte's Wadsworth told CNBC that absorbing a damaged brand will take a great deal of effort to fix.

"[It]will be costly and a lengthy process given the scale of the opposition, but would reap rewards in the long term."

Neither Monsanto nor Bayer had not responded to CNBC's request for comment by the time of publication.

In Harris Poll's 2016 study of America's most loved and hated companies, Monsanto garnered a "poor" rating and ranked fifth-lowest.

The firm has been attacked for creating "frankenfood" after years of developing genetically modified crops.

The Organic Consumers Association in the United States claimed that Bayer's proposed mega deal will create a big public relations challenge for the German company at home.

On its website, the organization said Germans 'detest' both genetically modified seeds and the weed-killer that Monsanto produces.

Tricky History

In 2002, there was public outrage when Monsanto revealed that some GMO canola seeds that had not yet been approved for use in the United States might have found their way to farmers' fields.

And in 2004 Monsanto bowed to worldwide protests and abandoned a GMO wheat project.

The company has also upset the farming community in the U.S. by insisting farmers aren't allowed to save seeds from one year until the next.

Monsanto further incensed many after it made sure it had the right to inspect the fields of its customers and brought lawsuits against farmers who it claimed violated the company's policies.

In a section on its website called 'Just Plain False', Monsanto rejects a range of accusations including suggestions that GM foods are unsafe or that it holds undue influence over governments.

In one posting, Monsanto highlights its belief that GMO crops have been tested more than any crop in the history of agriculture.

Confident of a deal

Competition authorities on both sides of the Atlantic will be sure to scrutinize the deal, but Bayer CEO Werner Baumann said to CNBC Monday that he expects regulators to give a green light.

"Both businesses are highly complementary and it's very much a growth story that is behind the combination, the product portfolios complement each other perfectly.

"The regional fit is really great and while there might be at one point or another, discussions with regulators, we don't see this as a major issue," he said.