Protesters marching against Monsanto in Paris in May © AP
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Two nightmarish scarecrows stand against a leaden sky. One with a skull for a face holds a spray can with the word “Roundup” emblazoned on the side — a reference to the herbicide produced by Monsanto.

The image is on the website of Campact, one of a number of campaign groups protesting against German conglomerate Bayer’s $62bn bid for Monsanto, the world’s largest producer of genetically modified seeds.

“If Bayer really buys Monsanto, a mega-corporation will arise that controls almost everything we eat,” says Campact. The group exhorts supporters to sign a petition challenging the proposed takeover, and so far 92,900 people have heeded its call.

The slightly hyperbolic imagery conveys some of the emotion swirling in Germany around Bayer’s blockbuster bid for a US company that is the global green movement’s bogeyman-in-chief.

Bayer’s intentions are currently unclear. On Tuesday, Monsanto rejected its offer as “incomplete and financially inadequate” while leaving the door open for further discussions. Bayer has yet to come back with a higher bid.

But it is clear that chief executive Werner Baumann will not only have to convince Monsanto’s shareholders of the virtues of a deal. If Campact’s rhetoric is anything to go by, winning over public opinion at home could prove equally challenging.

“Bayer has a squeaky-clean brand, with lots of positive connotations — its oldest brand is aspirin, after all,” says Torben Bo Hansen, head of Philipp und Keuntje, a German advertising agency. “But for large parts of the population Monsanto is evil personified.”

“The potential is definitely there for Bayer’s brand to suffer in a takeover,” he adds.

Above all environmentalists despise Monsanto because of its leadership in genetically modified organisms, or “Frankenfood” as greens call them — a no-no in Germany, where 1m hectares of land are farmed organically. The company is also widely associated with glyphosate, the active ingredient in Roundup, which the World Health Organisation said last year was probably carcinogenic. The EU is currently debating whether to relicence glyphosate, with some big European governments opposed.

Bayer dismisses concerns that its reputation could suffer from a combination with Monsanto. Only in Europe are GMOs controversial, says Mathias Kremer, head of strategy at Bayer’s crop science division. “On a global level, the debate about GMO is neutral or positive,” he adds.

He acknowledges such crops are a non-starter in Europe, at least for the time being. “It’s not about bringing GMO into Europe — we don’t envisage [their] being accepted broadly in Europe in the foreseeable future,” he says. “Monsanto actually has a considerable business in Europe, but it’s non-GM.”

Nonetheless, Mr Baumann admits investors have expressed concern to him that a combination with Monsanto could “taint” Bayer’s “stellar reputation”.

The company has hired an army of public relations firms to help it sell the deal: Brunswick, CNC, Sard Verbinnen, Hering Schuppener and Finsbury are all on board, with the latter two dealing exclusively with reputational issues.

“We are developing the appropriate reputational measures,” says Mr Baumann. “We have support from a good number of very good agencies that are addressing this issue — the issue of communications and reputation management.”

There is clearly a lot of selling to do. Bayer’s shares have fallen about 9 per cent since last Thursday, when it revealed it had made an unsolicited offer for Monsanto.

The slump was largely driven by concerns that the takeover, which if completed would be the biggest ever by a German company, was too much of a financial stretch for Bayer.

But jitters about the potential damage to Bayer’s brand also played a role, says Jürgen Gietl, managing partner of BrandTrust, a consultancy. “It was definitely one of the factors in the share price fall, if not the only one,” he adds.

That is disputed by others. The reputational factor “just isn’t an issue for investors”, says Martin Fassnacht, a professor at WHU-Otto Beisheim School of Management.

He adds public opinion is an important but not overriding concern for Bayer, because it is “stronger in B2B than in B2C”.

On that point, Mr Gietl concurs. One should differentiate, he says, between the way Monsanto is perceived by the general public, by investors and by its own customers. “The public might be critical but the people who actually use their products aren’t,” he adds. “A farmer is above all interested in how best to cultivate his land.”

Others say the criticism to which Monsanto is subjected is unfair, considering other companies such as Swiss agribusiness Syngenta also sell genetically modified seeds. “They’ve become the poster child for GMO globally, so any time an activist group wants to oppose GMO they’re the easy target,” says Jeffrey Stafford, analyst at Morningstar. “They created it and are the biggest seller ... they get all the backlash.”

He says one option for Bayer would be to drop the Monsanto name if the transaction went through, to prevent that “negative sentiment carrying over to the new company”.

There was a similar dynamic with Agent Orange, the defoliant used by the US military in the Vietnam war. Monsanto is often associated with the chemical, and the lawsuits brought after the war by ex-servicemen who suffered from the after-effects of exposure to it — but the defoliant was actually produced by a several companies, including Bayer.

And Bayer itself is perhaps not as squeaky-clean as it first appears. The company was rocked by scandal in 2001 when its blockbuster cholesterol drug Lipobay was found to have serious side-effects.

Also, experts say a neonicotinoid insecticide it produces may have contributed to the decline in the bee population.

Still, Monsanto is the company with the larger image problem, as the history of its 2013 acquisition of data science company Climate Corporation shows. David Friedberg, Climate Corp’s chief executive, told the New Yorker that he was not prepared for the response from his family, friends and colleagues. “When I shared the news with my dad recently, his first reaction was, ‘Monsanto? The most evil company in the world? I thought you were trying to make the world a BETTER place?’”

Additional reporting by Lindsay Whipp in Chicago

Copyright The Financial Times Limited 2017. All rights reserved.
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