Monsanto announced in a prepared statement that its board was going to review the Bayer proposal, which would be subject to regulatory approvals, due diligence and other conditions. Bayer, whose farm business produces seeds as well as compounds to kill weeds, bugs and fungi, said an acquisition would help it “create a leading integrated agriculture business”. Monsanto, the world’s largest seed company, also licenses genes that enable biotech crops to withstand pests, herbicides and drought.
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However, spurning a deal with Bayer over concerns a tie-up might not receive antitrust clearance could also pose challenges for Monsanto – its own bid for Syngenta previous year would have meant significant expansion in seeds. But the role of Monsanto in any deal has been a sticking point.
Shares in United States seed company Monsanto grew more than seven per cent in after-hours trading after German rival Bayer confirmed it is seeking to take over the firm.
While Monsanto’s focus on seed technology ushered in years of growth, it has left the company with fewer chemical products to offer farmers compared with some competitors, said Jason Miner, an analyst with Bloomberg Intelligence.
Following these deals, a potential combination of Bayer and Monsanto would put 83% of US corn seed sales and 70% of the global pesticide market under the control of the three consolidating companies, raising fears from the agricultural sector at a time when farmers face heavy pressure after three years of sliding crop prices.
If the takeover happens, the new company will be the world’s largest agricultural supplier.
Huwald said “the businesses are geographically complementary, with Monsanto having a strong presence in North America and Bayer in Europe and Asia”.
Monsanto Company (NYSE:MON), the world’s largest seed seller, is the target of a massive takeover bid by German chemical-maker Bayer (ETR:BAYN).
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.
A price around $120 to $125 a share, representing a premium of 35% to 40%, would probably be needed to get a Bayer-Monsanto deal done, Bernstein analysts Jeremy Redenius and Ronny Gal wrote in a note to clients Thursday.
Bennett, in emailed comments to Reuters, said he was “furious” that Bayer had not engaged with him over the approach, adding the “fine work” of recently appointed Chief Executive Werner Baumann’s predecessor had been “ripped up”. Monsanto’s currency for deals has also waned.
Belgian biotech company Plant Genetic Systems became part of Bayer through the Aventis acquisition.
The offer comes amid a wave of consolidation in the industry, with rivals Dow Chemical, DuPont and Syngenta all entering mergers recently.
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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.
