Latest / Bloomberg Intelligence / Bloomberg's McCracken on Monsanto, Nizza on Trump Pivot (Audio)

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Bloomberg's McCracken on Monsanto, Nizza on Trump Pivot (Audio) · Bloomberg Intelligence

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  Speaker 1: that's a Bloomberg Business flash. This is ta Game Stock
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  Speaker 1: with Kathleen Hayes and Pim Fox on Bloomberg Radio. Will
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  Speaker 1: the deal get done? Will buyer consummated acquisition of Monsanto?
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  Speaker 1: Here to tell us more. Jeff mccrack and Managing Editor
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  Speaker 1: Global M and A I p O S, Restructurings and
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  Speaker 1: Activists for Bloomberg News. He can be followed on Twitter
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  Speaker 1: at A j C. McCracken. Alright, j C McCracken, tell
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  Speaker 1: us what's going on with Buyer or Bear? For those
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  Speaker 1: old enough to remember and Monsanto? Well, Mr Grant, Hugh Grant,
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  Speaker 1: the CEO of Monsanto. About two years ago, he tried
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  Speaker 1: to buy Monsanto, tried to buy c Genta, and it's
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  Speaker 1: all his fault because that didn't work out, not the
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  Speaker 1: first time or the second time. But he he showed
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  Speaker 1: the world and showed his investors that there needs to
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  Speaker 1: be consolidation and that he would support a big consolidation
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  Speaker 1: play among the agri chemical space. Well, he's no longer
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  Speaker 1: or the buyer. He is the target as Bayer or Buyer,
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  Speaker 1: however you want to pronounce the German company. They've made
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  Speaker 1: a run at Monsanto. Their first offer was roughly a
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  Speaker 1: hundred and twenty to a share. They bumped into a
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  Speaker 1: hundred and twenty five a share. The two sides are
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  Speaker 1: making some progress now on the price and probably more importantly,
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  Speaker 1: the termination fee, which is what would get paid to
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  Speaker 1: Monsanto if regulators in Europe or in the United States
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  Speaker 1: block to deal. Why would Hugh Grant, the chief executive
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  Speaker 1: of Monsanto, why would he go from being an acquirer
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  Speaker 1: to being someone that would be acquired? And should anybody
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  Speaker 1: in their St. Louis headquarters be nervous they're going to
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  Speaker 1: be job cuts? Is there overlap? If? Certainly there will
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  Speaker 1: be some job cuts, and people don't like to admit that,
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  Speaker 1: but when two similar companies or companies that do similar
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  Speaker 1: things come together, there will inevitably be people who are
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  Speaker 1: in HR, or people who are in I T or
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  Speaker 1: in accounting, you know, just operations that could be done
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  Speaker 1: by you know, someone else in another country that they
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  Speaker 1: will lose. Those those jobs will go away, whether they
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  Speaker 1: are hundreds or thousands of people. Uh. To answer your
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  Speaker 1: first question about how Monsanto became a target, it's simply
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  Speaker 1: the fact that they couldn't get this in gender deal
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  Speaker 1: done and they've become They've just become an easy takeout
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  Speaker 1: candidate for someone like Buyer. Buyer is roughly ninety billion
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  Speaker 1: plus in market cap, whereas before all this began, Monsanto
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  Speaker 1: was half a um. They've not had a great couple
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  Speaker 1: of years. Mon Santo's miss some earnings targets and pulled
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  Speaker 1: back on some of their guidance in terms of profitability
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  Speaker 1: and EVA dot. So they had been shrinking until this
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  Speaker 1: offer came along. Now, this deal, if it gets done,
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  Speaker 1: we're going to be we'll probably value Monsanto at sixty
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  Speaker 1: billion or more, which is a lot of money. But
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  Speaker 1: Buyer is a big enough company and can borrow enough
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  Speaker 1: money banks in Europe are willing to lend to them
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  Speaker 1: that they can get that deal done. All right, Just
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  Speaker 1: talking about money, Uh, we know that Hugh Grant, the
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  Speaker 1: chief executive, would get about twenty six million dollars if
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  Speaker 1: he was terminated after a change in control of the company.
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  Speaker 1: We're not implying that he would be, but that's just
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  Speaker 1: in his contract. Does Buyer really need this deal? Why
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  Speaker 1: are they doing it? There's been a slowdown, if you will,
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  Speaker 1: in spending by the by their their customers, their consumers,
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  Speaker 1: if you will, which are mostly big farms. Um, there's
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  Speaker 1: been a lot of pressure on food prices. There's been
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  Speaker 1: a lot of pressure on these farmers and they're not
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  Speaker 1: spending as much money on the seeds or don't want
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  Speaker 1: to spend as much money on the seeds and the
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  Speaker 1: fertilizers that they would get from buyer or mont Santo.
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  Speaker 1: You know the other thing that's going on if your
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  Speaker 1: buyer is you can't ignore the fact that sin Jenta
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  Speaker 1: did get acquired by a big Chinese company, cam China
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  Speaker 1: and Dow and du Ponter both are also coming together.
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  Speaker 1: So if you don't consolidate, you are going to be
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  Speaker 1: under pressure from others who are coming together and doing
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  Speaker 1: the kinds of deals you wish you would be doing
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  Speaker 1: at buyer regulatory oversight. I mean, these guys are gonna
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  Speaker 1: end up controlling what maybe three quarters of the market
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  Speaker 1: for like cotton, and yeah, so I would not be
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  Speaker 1: surprised if the regulators, either in EU or in the
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  Speaker 1: United States took very long, hard looks at these deals.
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  Speaker 1: That's why the termination view is so important, because if
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  Speaker 1: you're Monsanto and you agree to a deal and put
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  Speaker 1: yourself on the block, you're not put yourself on the block,
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  Speaker 1: but show people you're willing to be sold, and then
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  Speaker 1: deal gets blocked six months from now. You want something
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  Speaker 1: for the effort, which in their case will probably be
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  Speaker 1: a couple of billion dollars That the biggest I think
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  Speaker 1: hurdle will be serfious. The Committee on Foreign Investment in
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  Speaker 1: the United States. They they will investigate whether there's a
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  Speaker 1: national security issue. Mon Santo doesn't make missiles or bombs,
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  Speaker 1: but they are very crucial to our food supply here
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  Speaker 1: in the United States, so people, the regulators there will
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  Speaker 1: look very closely at who buyer is and what they're
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  Speaker 1: thinking of doing. Thanks very much for enlightening us us
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  Speaker 1: up to date. I know you're gonna be riding about
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  Speaker 1: this until the deal closes. Jeff McCracken, he is Managing
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  Speaker 1: Editor Global m and A I P O S were
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  Speaker 1: structuring an activist for Bloomberg News, and you can follow
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  Speaker 1: him on Twitter at j C McCracken. Al Right, we
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  Speaker 1: turn now to the world of politics and Mike Nitsa.
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  Speaker 1: He is our executive editor for Bloomberg Politics and he
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  Speaker 1: can be followed on Twitter at Mike nits and I
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  Speaker 1: double z A. And he's here to tell us a
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  Speaker 1: little bit about the campaign. And I want to start off,
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  Speaker 1: Mike by getting your thoughts or just give us an
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  Speaker 1: update on the evidence that Donald Trump may or may
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  Speaker 1: not be changing or altering or in some way amending
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  Speaker 1: his position on immigration reform. Sure. So this week actually
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  Speaker 1: started on Sunday with the new campaign manager, Kelly and Conway,
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  Speaker 1: saying that this would be immigration Week and uh he
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  Speaker 1: would be holding a round table and then uh and
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  Speaker 1: then delivering a major policy speech on Thursday that would
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  Speaker 1: articulate I was supposed to be in Colorado, yes, and uh,
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  Speaker 1: and then by by Monday that was pushed back or delayed. Uh,
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  Speaker 1: the schedule was kind of thrown up. Uh, the whole
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  Speaker 1: schedule was kind of torn up. And then this morning
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  Speaker 1: we received a new schedule that did not include the
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  Speaker 1: the immigration policy speech but did include uh more round
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  Speaker 1: tables and the campaign says that Trump is seeking counsel
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  Speaker 1: on his immigration policy right now. Is that because it
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  Speaker 1: has been misinterpreted, at least according to the Trump campaign
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  Speaker 1: by obviously uh Democratic opponents. Yeah. I think they they
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  Speaker 1: feel like they've uh that the the reporting on on
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  Speaker 1: their actual plan has been inaccurately reported by by the media.
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  Speaker 1: But but also they've had problems in the past in
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  Speaker 1: rolling out their their message and making sure people are
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  Speaker 1: are getting the right uh, the big things right. And
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  Speaker 1: so I think, uh, when it comes to the main
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  Speaker 1: leg of the immigration policy that they're focusing on this week,
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  Speaker 1: which is uh, Trump's pledge over a year ago to
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  Speaker 1: to uh to support all illegal immigrants. UH. And now
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  Speaker 1: they're saying that that's that's not you know, a major
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  Speaker 1: shift from where policy is at right now. According to
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  Speaker 1: US law, undocumented undocumented emmirates must be sent back. It's
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  Speaker 1: just not being enforced to to the fullest, is kind
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  Speaker 1: of where they're ending up on this now. He made
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  Speaker 1: some of these comments in an appearance on Fox News
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  Speaker 1: with Bill O'Reilly. He did that was that was an
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  Speaker 1: amazing interview. I think any close observer of of Donald
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  Speaker 1: Trump had their jaw dropped for at least a few
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  Speaker 1: seconds of it when he appeared to give Obama credit
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  Speaker 1: for for the work he'd done in deporting undocumented immigrants.
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  Speaker 1: And in fact, UH President Obama has been labeled supporter
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  Speaker 1: in chief by by immigration rights groups. UH, you know
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  Speaker 1: as recently as a few years ago. UM. So he
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  Speaker 1: he kind of said that he would model his own
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  Speaker 1: approach after Obama's and uh and apply the law. He
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  Speaker 1: just he would just do it with with more energy,
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  Speaker 1: is what he suggested. Tell us about Donald Trump and
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  Speaker 1: whether the spending that the campaign is doing. Will it
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  Speaker 1: match what Hillary Clinton is doing? Because I understand that,
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  Speaker 1: you know, the NFL season is upon us, and the
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  Speaker 1: Democrats they say they're going to spend millions. Yeah, I
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  Speaker 1: don't think there's any way that the Trump campaign can
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  Speaker 1: spend as much as the Clinton campaign. They got a
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  Speaker 1: much later start in uh in raising money, mostly because
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  Speaker 1: Trump was self funding his primary run and that was
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  Speaker 1: a major selling point for him. Uh. And then it
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  Speaker 1: took a little longer than usual to set up the
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  Speaker 1: general election fundraising operation. Uh. They raised a lot of
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  Speaker 1: money in July, definitely almost reached parody with the Clinton campaign. Uh,
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  Speaker 1: but it's it's still Uh. It's not only a challenge
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  Speaker 1: to raise the money but also to spend it. And
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  Speaker 1: I think what we saw in July is that they
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  Speaker 1: weren't spending the money on ads. They were spending it
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  Speaker 1: on on television ads, which is usually a huge expenditure
• 10:14
  Speaker 1: for for campaigns, and also ground operations where you're you're
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  Speaker 1: paying to open offices and get people to go door
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  Speaker 1: to door and can convince voters to vote for you
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  Speaker 1: in battleground states. According to a spokesman for Priorities USA,
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  Speaker 1: which is the political Action committee backing Hillary Clinton. They
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  Speaker 1: say that they have not spent the bulk of a
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  Speaker 1: hundred and sixty million dollars in ad reservations that they've
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  Speaker 1: already made. Yeah, it's really, uh, it's it's it's really
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  Speaker 1: a completely uh asymmetric war when it comes to that.
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  Speaker 1: Thanks very much for joining us. Mike Nizza is Executive
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  Speaker 1: editor Bloomberg Politics. Go ahead follow him on Twitter at
• 10:56
  Speaker 1: Mike Nizza and I double z A. You're listening to
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  Speaker 1: taking Stockhl'm pim Fox My co host Kathleen Hayes is
• 11:06
  Speaker 1: on her way to Jackson Hole, Wyoming for the Federal
• 11:08
  Speaker 1: Reserve Annual Symposium. Janet Yellen speaks Friday, ten am Wall
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  Speaker 1: Street Time,