Bayer shares plummeted over eight percent to a two-and-a-half year low on Thursday, as investors are anxious about the potential cost of the merger.
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Meanwhile Bayer, which has a market value of $90 billion said the proposed takeover “would reinforce Bayer as a global innovation-driven life science company with leadership positions in its core segments, and would create a leading integrated agriculture business”.
Monsanto’s board said it was reviewing the proposal, but said that a deal was not guaranteed. It added there would be “no further comment” until the board of directors completed its review of the proposal.
While the U.S. company was assessing the offer, it said there was “no assurance” that any transaction would be “entered into or consummated”. The deal is the largest foreign acquisition ever by a Chinese company, as Beijing seeks to secure the country’s own food supply.
The possibility that Bayer could acquire Monsanto-just confirmed Thursday by both companies-is weighing heavily on the minds of USA farmers. In March, Monsanto slashed its earnings forecast for 2016. A deal with Monsanto could lead to a breakup of the group, according to analysts.
Mr. Grassley said a Bayer-Monsanto deal would likely prompt him to raise concerns with the Justice Department. Monsanto itself pursued Syngenta previous year. Monsanto’s sales in fiscal 2015 (ending August 31) were $15 billion. According to a recent research report from Morgan Stanley, the merged company is expected to account for almost 36% of USA corn seeds production, 28% of the world’s pesticides, and 28% of United States soybean seeds production.
And the price tag on any deal would be huge: Monsanto’s market value is around $42 billion.
Both Bayer and German rival BASF SE have been looking to build scale in agrichemicals. Last year, Dow and DuPont combined to form a new industrial titan worth $130 billion.
Its Crop Science Division has businesses in seeds, crop protection and non-agricultural pest control, which is operated into two operating units – Crop Protection / Seeds and Environmental Science.
A spokesman for Syngenta said the company “is focused on closing the ChemChina transaction, which will ensure continued choice for growers world-wide”.
Both Bayer and BASF had been exploring tie-ups with Monsanto for months, but valuation concerns have made a deal elusive, people familiar with the matter have previously said.
The National Farmers Union, an industry group that has already come out against a merger of Dow and Dupont, will likely oppose Bayer’s bid for Monsanto, said President Roger Johnson. It introduced one of its first genetically modified seeds in 1996, Roundup Ready soybean, spawning heated controversy with critics of biotechnology.
Germany’s Bayer BAYN, -8.12% on Thursday said it had approached St. Louis-based Monsanto about a possible deal.
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Bayer is the second-biggest maker of crop chemicals, with an 18% market share, just behind Syngenta’s 19%.
