A combination of the two would have 28 percent of the global market for pesticides and a strong presence in the US corn and soybean seed business.
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Bernstein Research analyst Jeremy Redenius estimated the price at 41.9 billion euros ($47 billion), plus 6.7 billion euros in assumed debt. Bayer, confirming the bid, said the combination would bolster its position as a life sciences company.
Although no takeover price has been mentioned, market analysts anticipate Bayer would have to pay a steep premium to acquire Monsanto, such that it could become the highest recording deal in the crop chemicals industry.
The share price of Bayer, meanwhile, fell 7.5 per cent to €89.15 after it confirmed its interest.
Monsanto was up 4.7 percent at $101.77 in afternoon trading in NY.
No financial details were disclosed and any possible tie-up is likely to be closely examined by regulators over competition issues.
Monsanto said in a statement its board was reviewing the proposal, which is subject to due diligence, regulatory approvals and other conditions. “With Bayer’s new focus on healthcare and the agro business seeing synergies across biotech R&D, we view this approach in-line with the strategy”.
Bayer’s crop science division has businesses in seeds, crop protection and non-agricultural pest control, potentially complementing Monsanto’s seeds assets.
As crop prices have fallen around the world and biotech seeds have neared a point of saturation in major markets where they are allowed, such as the US and Brazil, world-wide acreage of genetically engineered crops edged 1% lower previous year, the first such decline on record, according to the International Service for the Acquisition of Agri-Biotech Applications.
ChemChina’s deal for Syngenta is now the subject of intensive regulatory review in the United States.
A combination of the two would have 28 percent of the global market for pesticides and a strong presence in the US corn- and soybean-seed business.
The offer comes two weeks after Werner Baumann became CEO of Bayer.
Monsanto is worth $42 billion (£28.8 billion) by market capitalisation, meaning an acquisition by Bayer, the maker of Yasmin birth control pills, would likely be bigger than ChemChina’s February deal to buy agrichemicals firm Syngenta for $43 billion.
Monsanto late Wednesday said there was no guarantee of a deal.
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.
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Both Bayer and its German rival BASF SE have been looking to build scale in agrichemicals in order to remain competitive. We view a transaction as still relatively unlikely ( 25%), but expect the disclosure to be near-term positive for shares in Monsanto, Novozymes and FMC (FMC), and negative for BASF, Syngenta and DuPont…
