Drug and chemicals giant Bayer AG made an unsolicited takeover offer for agrichemicals behemoth Monsanto Co., both companies said in separate statements, confirming ongoing speculation.
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Now comes word that Bayer has made an offer to purchase Monsanto, with the potential creation of a $67 billion crop technology giant that would make it the largest player in seeds, crop protection and biotech.
Monsanto, based in St. Louis, said it was reviewing Bayer’s proposal. There is no assurance that any transaction will take place, it said.
Monsanto disclosed the approach on Wednesday before Bayer confirmed its move, although neither released proposed deal terms. Last year, the company failed in an attempt to buy the Swiss pesticides firm Syngenta for $47bn and has since itself become a takeover target, with global crop prices falling. Monsanto, with a market value of $42 billion, said it’s reviewing the offer in a statement today.
Monsanto shares were seen 7.6 percent higher at $104.50 in pre-market trades. “Any deal would require regulatory approval”, according to a news report published by CNN. Sanford C. Bernstein & Co. analysts said acquiring Monsanto outright “does not make sense financially” as Bayer likely would need to issue $30.3 billion in equity and raise $16.8 billion in cash, and may need to sell its animal-health business to help fund a deal.
In the US, farm-state politicians could raise food-security concerns when confronted with the potential for about 40% of USA corn and soybean seeds being sold by non-U.S. companies if Monsanto becomes German-owned.
The proposed deal between Bayer and Monsanto could prompt competition concerns due to the vast control it would have in the market.
Huwald said “the businesses are geographically complementary, with Monsanto having a strong presence in North America and Bayer in Europe and Asia”.
Six companies dominate agrochemicals, with three, Monsanto, DuPont and Dow, domiciled in the United States, and three, Syngenta, Bayer and BASF, domiciled in Europe.
The biggest merger in the chemicals industry took place late a year ago when Dow Chemical teamed up with Du Pont to form a new $130bn company. The Seeds and Genomics segment produces raw crop seeds, including corn, soybean, cotton, and canola seeds under the DEKALB, Channel, Asgrow, and Deltapine brands; and vegetable seeds, such as tomato, pepper, melon, cucumber, squash, beans, broccoli, onions, lettuce, and others under the Seminis and De Ruiter brands.
“The Bayer-Monsanto talks only heighten the possibility that the industry, farmers and consumers could be adversely impacted by this consolidation trend”, U.S. Sen. It introduced one of its first genetically modified seeds in 1996, Roundup Ready soybean, spawning heated controversy with critics of biotechnology.
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Bayer, which employs around 117,000 workers, had global sales in fiscal year 2014 of 46.3 billion euros (USD 51.9 billion).
