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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot com, the Radio Plus mobile app, and on your radio.

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Speaker 1: This is a Bloomberg Business flag from Bloomberg World Handquarters.

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Speaker 1: I'm Charlie Pellett. Stocks are lower. This update brought to

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Speaker 1: you by Brown University, with a new Executive Master in Cybersecurity,

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Speaker 1: is the best security Now over to the First Word

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Speaker 1: Breaking News desk for today's afternoon call, and here's Bill Maloney.

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Speaker 1: Good afternoon, Charlie. Stocks are under pressure today but off

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Speaker 1: session lows at one point. The DALL is down a

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Speaker 1: hundred and ninety six points and is currently lowered by

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Speaker 1: ninety eight points. Subs dropped ten and NAZAC declines by

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Speaker 1: thirty three. The small cap six DREW drops five points

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Speaker 1: and the US ten yield at one point eight five

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Speaker 1: per cent. Six out of tennis to be sectors are lower,

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Speaker 1: led by losses and industrials, Financials and healthcare gains and

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Speaker 1: utility stables, Materials and energy transports fall forty points and

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Speaker 1: as a botech Sinc. Forty five and the vix is

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Speaker 1: higher by four point six percent. Down Leaders to the

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Speaker 1: downside included Goldman, Sachs, Boeing, and IBM, Walmart and Cisco.

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Speaker 1: Led to the upside. Walmart gained as much as nine

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Speaker 1: and a half percent. That's most since two thousand and eight.

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Speaker 1: After its results and after the bell. Tonight, look for

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Speaker 1: earnings from Autodesque, Applied Materials and the Gap live from

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Speaker 1: the first breaking news task on Bill Maloney. Charlie, all right,

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Speaker 1: thank you very much. Bill Maloney will be all over

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Speaker 1: those earnings reports as they break into hear live breaking

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Speaker 1: news over your terminal type squawk ASQ you a w

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Speaker 1: K on the Bloomberg. I'm Charlie Pellock. That's a Bloomberg

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Speaker 1: business flash. You're listening to taking stock with Kathleen Hay

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Speaker 1: and Pim Box on Bloomberg Radio. Seeds and anti trust issues. Yes,

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Speaker 1: Bear bidding four months. Santo here to give us more

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Speaker 1: details and tell us about the likelihood that the deal

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Speaker 1: will go through is joinas Ox Guard. He is equity

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Speaker 1: analyst for chemicals at Sanford Bernstein. You want to thank

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Speaker 1: you very much for being with us. Tell us a

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Speaker 1: little bit about why Bear wants to acquire Monsanto my pleasure.

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Speaker 1: I think it's Uh, they're afraid of being left out

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Speaker 1: at the space is consolidating around them, and they're realizing

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Speaker 1: that there's there's only three people left on the dance

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Speaker 1: floor and they need to do something otherwise they'll be

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Speaker 1: the loan one out. Well, our story today on the

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Speaker 1: Bloomberg Bears pursuit of forty five billion dollar mons Santo

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Speaker 1: greeted with skepticism. Uh, just piles up all the bad

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Speaker 1: steps that Monsanto has taken, and so in that sense,

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Speaker 1: I guess it's a good time to acquire them. Yeah,

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Speaker 1: I think that's right. And the mont Santo has had

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Speaker 1: an incredible string of bad news over the last couple

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Speaker 1: of months. Um, I think, well beyond anything they had

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Speaker 1: control over for the most part. Um, but most of

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Speaker 1: them haven't really hit their earnings. So the downward revisions

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Speaker 1: they've been making, that's been at least some of that

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Speaker 1: has in currency. Some of that has been just the

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Speaker 1: market being down, And maybe I should I should qualify

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Speaker 1: this way, it's a good time to consolidate the industry,

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Speaker 1: whether that is Monsanto versus others. I think it's more

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Speaker 1: of the difference. Why are Bare shareholders not as excited

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Speaker 1: about this deal as perhaps the investors in mont Santo. Well,

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Speaker 1: that will be the premium that Buyer shareholders are expecting

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Speaker 1: Buyer to pay up for. But I mean, the stock

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Speaker 1: is down more than eight percent today. No one seems

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Speaker 1: to like the deal. Yeah, but the thing is that

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Speaker 1: buyer doesn't have the cash to pay for this, so

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Speaker 1: they're gonna have to issue equity buyo fareholders not particularly

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Speaker 1: pleased on this um. That said, I joined the skepticism

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Speaker 1: that I'm not. I don't particularly optimistic that this deal

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Speaker 1: to go through. I think Buyer will float a an

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Speaker 1: offer with a share price that is to know what

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Speaker 1: Monsanto is willing to accept, and they might dancer on

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Speaker 1: for a bit. But ultimately I think there's a disconnect

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Speaker 1: between what buyers willing to pay but mos Santis will

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Speaker 1: exactly negotiating what. Broadly speaking, when you look at this industry,

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Speaker 1: what are the what are a couple of the big

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Speaker 1: forces that companies like Buyer like Montsanto are contending with,

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Speaker 1: in particular those that would argue for or against a

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Speaker 1: marriage like this, And a big source is the end

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Speaker 1: of the age cycle of their cultural cycle. Okay, yeah, exactly.

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Speaker 1: The corn price, the soybean prices are very high between

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Speaker 1: two thousands six two thousand, twelve twelve or thirteen. Farming

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Speaker 1: and incomes are high. And then when the top prices

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Speaker 1: held um, farming and income dramatically during the boom time,

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Speaker 1: farmer costs had gone up, and so when revenue plunge,

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Speaker 1: the farmers are actually net negative for the first time

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Speaker 1: in well about a decade. And so when the farmers

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Speaker 1: net income is negative, they just don't have the money

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Speaker 1: to pay for proceeds or or any of the other inputs.

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Speaker 1: Now they can, they still buy because they still have

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Speaker 1: to sew. But it does mean that they look more

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Speaker 1: aggressively at cost, They negotiate more, they don't upgrade. And

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Speaker 1: you can see that in mont Amtle's numbers. Right the

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Speaker 1: first quarter mont cento price was exactly flat. Voliumes down slightly,

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Speaker 1: and that's largely true for the entire industry exception of

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Speaker 1: the pond. You know, just what happens for oil prices

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Speaker 1: continue there, we bound continue to move higher. Will that

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Speaker 1: affect the deal? Not really? And the oil prices has

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Speaker 1: very little impact on mont Santo um. There's an indirect

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Speaker 1: relationship between corn demand and oil in that you can

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Speaker 1: push out a little bit more into ethanol, but we're

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Speaker 1: basically maxed out already. But that doesn't really do much

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Speaker 1: of an impact. Very little of their input costs are

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Speaker 1: based on crude, so I don't I really don't think

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Speaker 1: oil should have any impact on them. M jonas in

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Speaker 1: Europe in particular, you know Monsanto and its genetically modified seeds.

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Speaker 1: This is such a contentious thing, so many Europeans are

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Speaker 1: against g m OS. Does that enter into the this

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Speaker 1: deal at all? It is kind of surprising, right, that's

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Speaker 1: the European based company making bid for what is in

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Speaker 1: some surveys and most hid the company in the world,

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Speaker 1: um and and and well possibly also qualified for the

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Speaker 1: most misunderstood company in the world. But Buyer doesn't seem

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Speaker 1: to have been painted with that same brush. I mean,

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Speaker 1: Buyer does do GMCED research already, they sealgic and seeds,

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Speaker 1: but they are not painted us the great evil that

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Speaker 1: Monsanto is um. If they do succeed, i'd expect that

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Speaker 1: the Munsantum name would probably disappear. And that's probably a

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Speaker 1: minor positive. I don't think it's like a huge impact,

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Speaker 1: but probably something would be disagreeing for quite quickly. All right, Well,

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Speaker 1: jonahs Star, thank you so very much for joining us.

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Speaker 1: He's equity analysts for chemicals at Sanford burn Steen. Weighing

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Speaker 1: in on the potential takeover of Monsanto by Germany's buyer.

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Speaker 1: He's not so hot on the deal either. This is

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Speaker 1: taking stock on Bloomberg Radio. Bloomer Taking Stock is brought

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