NEW YORK (TheStreet) -- Shares of Monsanto (MON) were lower in mid-morning trading on Thursday as the St. Louis-based agricultural products supplier's $66 billion all-cash deal with German chemical and pharmaceutical company Bayer (BAYRY) is likely to face political and regulatory scrutiny, according to Reuters.
The combined company will represent the biggest maker of seeds and pesticides in the world.
Bayer's pesticide-focused agricultural business has few overlaps with Monsanto's seed franchise, the company's executives said.
However, the merger of the world's two dominant farm suppliers comes at a time when rivals are also combining. The consolidations have since generated concern among politicians and regulators over reduced competition in the $100 billion global market, Reuters notes.
U.S. Senate Judiciary Committee Chairman Chuck Grassley (R-IA) called for a hearing next Tuesday to review the recent wave of consolidation. Farmers nationwide are worried that seed and chemical costs are increasing as grain prices have slid lower, resulting in plunging farm incomes, according to Reuters.
Senator Bernie Sanders (I-VT) labeled the deal as a "threat to all Americans," Reuters reports.
The deal is also expected to face extensive regulatory processes in the U.S., the European Union and elsewhere. Monsanto CEO Hugh Grant said the companies will need to file in 30 jurisdictions
Bayer will disclose which assets it plans to divest next week when details of the merger agreement become public, Reuters added, citing sources.
Shares of Bayer were sliding in mid-morning trading on Thursday.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates Monsanto as a Hold with a ratings score of C+. The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, it also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.You can view the full analysis from the report here: MON