Drugs and chemicals group Bayer has made a takeover proposal to US seeds company Monsanto, aiming to create the world’s biggest agricultural supplier of seeds and pesticides. Last year, Dow and DuPont combined to form a new industrial titan worth $130 billion.
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Creve Coeur-based Monsanto said on Wednesday night that it’s reviewing the offer, hours after its Chief Operating Officer Brett Begemann told Reuters “there’s nothing there”. There was no assurance that any transaction would take place, it added.
There has been speculation for some months that Monsanto, the world’s biggest seed company, could become a target for either Bayer or BASF. “The proposed combination 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”. Sources said Bayer would pay Monsanto shareholders with cash and stock, though the offer price could not be learned. He said Bayer might need a €27bn share issue to help fund this.
Bayer and Monsanto: A corporate marriage made in heaven or a problematic union from the start?
Monsanto is the leader in seeds, with a 26 percent market share, followed by DuPont with 21 percent.
In February, Swiss competitor Syngenta agreed to the China National Chemical Corp.’s acquisition offer, just months after refusing for a fourth time to sell itself to Monsanto.
Any deal between Bayer and Monsanto could raise U.S. antitrust concerns because of the overlap in the seeds business, particularly in soya beans, cotton and canola.
Following its unsuccessful bid for Syngenta, Monsanto, which is based in Saint Louis, Missouri, embarked on a huge restructuring programme, axing 3,600 jobs, or 16 percent of its workforce by 2018, closing sites and writing down assets. It preferred that the companies agree on a joint venture or use prices before the deal was announced.
News of the talks follows a wave of consolidation in the chemicals industry: DuPont and Dow Chemical agreed to combine past year, and ChemChina agreed to buy Syngenta of Switzerland in March after Monsanto’s own bid for its Basel-based rival failed.
The majority of firms in agrichemical are looking to genetically engineer additional strong plants and to make custom built chemicals that go along with the, selling the two together to the farmers who are struggling now with low prices of commodities. It also develops biotechnology traits that assist farmers in controlling insects and weeds in corn, soybean, cotton, and canola crops under the SmartStax, YieldGard, YieldGard VT Triple, VT Triple PRO, and VT Double PRO brands; and Intacta RR2 PRO, and Bollgard and Bollgard II, as well as Roundup Ready and Roundup Ready 2 Yield, and Genuity brands. Bloomberg News was first to report a week ago that Bayer was exploring a bid to become the world’s biggest supplier of farm chemicals.
The proposed deal between Bayer and Monsanto could prompt competition concerns due to the vast control it would have in the market.
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It could be of particular concern for farmers, who have previously raised concerns that such merges could lead to higher prices and less choice for them.
