German drug giant Bayer AG said Thursday that it is in talks to acquire USA agriculture behemoth Monsanto, a tie-up that had been the subject of weeks of speculation.
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Monsanto, the world’s largest seed maker with a market value of US$42 billion, says it has received an unsolicited takeover approach from Germany’s Bayer, the latest step in the consolidation of the global seed and crop chemical industry.
Monsanto shares surged last week following reports it could receive a takeover bid from Bayer for $40 billion or more. The deal is the largest foreign acquisition ever by a Chinese company, as Beijing seeks to secure the country’s own food supply.
Monsanto’s board is reviewing the proposal, which is subject to due diligence, regulatory approvals and other conditions, the company said in a statement. “There is no assurance that any transaction will be entered into or consummated, or on what terms”, the short statement added.
ChemChina’s deal for Syngenta is now the subject of intensive regulatory review in the United States.
The biggest merger in the chemicals industry took place late past year when Dow Chemical teamed up with Du Pont to form a new $130bn company. That left the other major global seed and pesticide players-Monsanto, Bayer and BASF SE-to potentially face enlarged rivals, and entertain a narrower range of potential partners.
Merging Monsanto, known for its controversial work with genetic modification of crop seeds, with the company that invented aspirin would bring together brands such as Roundup, Monsanto’s blockbuster herbicide, and Sivanto, a new Bayer insecticide. In March, Monsanto slashed its earnings forecast for 2016.
Monsanto is the leader in seeds, with a 26 percent market share, followed by DuPont, with 21 percent.
“It’s all wild speculation because there’s nothing there”, he said. Last year, Dow and DuPont combined to form a new industrial titan worth $130 billion.
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The analysts therefore felt a deal was unlikely because of the price, as well as possible reservations on the part of the competition authorities towards a combination of Bayer and Monsanto.
