Bayer Might Add Thousands of Jobs in U.S.

On 18th January 2017, after meeting with President-elect Trump, management at Bayer, one of the major German pharmaceutical company, stated that it would add thousands of high technical jobs in the U.S. and invest about $8 billion in R&D in the U.S. in coming 6 years.

Bayer in 2016 September reached a deal to acquire Monsanto, U.S. based multinational agrochemical and agricultural biotechnology company, for around $66 billion. Due to the fact Bayer by itself has a huge seed business; the deal is probably to encounter stiff scrutiny from the Federal Trade Commission and the Justice Department, whose leaders will shortly report to President-elect Trump. If the deal gets wiped out on anti-trust reasons, Bayer will have to pay out Monsanto a $2 billion fee. Should it get approved, Bayer will set up itself as the world’s biggest manufacturer of pesticides and seeds, and create the possibility to cut $1.5 billion in annual cost savings from the overlap operations.

Did Trump make it happen?

Maybe, generally, firms particularly foreign firms that make large U.S. transactions promise to make new investments and employ people as they seek to gain acceptance. After all, everyone knows that some job cuts will be coming. One of the big reasons of a merger like this is that it will enable Bayer to take out huge amounts of costs by getting rid of or considerably reducing Monsanto’s expense in the U.S. Given Trump’s tendency for calling out firms that cut jobs and general hostility to foreign companies, Bayer is certainly acting in a more sensitive manner than the common foreign acquirer in 2010 or 2012 would have. In inclusion, the belief in Trump’s transactional nature lots of individuals believe, with good reason,  that he, or his appointees, might try to impact deal approvals depending on their job impact—may have caused Bayer to emphasize job additions instead of job cuts.

Is it good for Bayer?

Yes, Bayer experiencing constantly low growth in its home markets in Europe certainly requires growth. The acquisition of Monsanto gives a possibility to considerably increase revenues, enhance its market position in the seed business, and boost revenue via cost reductions. What’s more, both Bayer and Monsanto currently spend lot of money on research and development and hire plenty of researchers and software engineers.