Following a busy few months that have seen Monsanto engaged in new acquisition negotiations, this time as a buyout target, the company’s earnings call Wednesday could be reflective of its ups and downs involving Europe.
In recent weeks, the Creve Coeur-based seed and chemical company has dealt with a takeover bid by German giant Bayer; uncertainty stemming from a British vote to leave the European Union; and EU regulatory developments regarding Monsanto’s Roundup herbicide.
Ahead of Monsanto’s 8:30 a.m. call, analysts are projecting earnings per share of $2.40, up from $2.39 for the same quarter last year, and revenue of $4.49 billion, down from $4.58 billion a year ago, according to Yahoo Finance.
Wednesday’s call marks the company’s first quarterly check-in since Bayer bid $62 billion for Monsanto in May. Monsanto rejected the bid but said it was open to continued conversations with the German pharmaceutical and chemical company.
But Bayer shareholders are only half the battle, said Matt Arnold, an Edward Jones analyst who follows Monsanto.
“They might not need their shareholder approval,” Arnold said, “but they can’t take over the company without Monsanto’s shareholders’ approval.”
As of now, Arnold said, a Bayer takeover is unlikely because the German company can’t afford to offer a price high enough to convince Monsanto shareholders to accept the deal.
Britain’s vote last week to leave the European Union shook Europe and the world. But what would it mean for Monsanto, which in addition to being pursued by a European suitor also has locations across the U.K. and EU?
“It is too early to tell,” Arnold said. “The first impact would be the change in currency and what it is going to impose on countries.”
Since the British referendum, the U.S. dollar has become stronger against the euro. On May 9, the day before Bayer made a written proposal to Monsanto, the euro was worth about $1.14. On Thursday, before the result of the vote was known, the euro was worth about $1.13. As of Tuesday, the euro was worth about $1.11.
Bayer’s shares have declined by 5 percent since the Brexit vote.
For now, at least, Monsanto can continue to sell Roundup in the EU. Regulators there have challenged sales of Monsanto’s leading weed-killer because of concerns that glyphosate, used in Roundup, is a carcinogen.
On Tuesday, the European Commission extended approval for Roundup by 18 months, Reuters reports.
Bernstein senior analyst Jonas Oxgaard estimated Monsanto could see earnings drop by as much as $100 million if the EU decided to outlaw glyphosate sales, according to the Reuters report.