German pharmaceutical giant Bayer is considering making a bid to buy American agrochemical company Monsanto, Bloomberg reports.
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Monday is now trading at $99.13, up $8.79 or 9.73 percent.
Bayer’s share price, meanwhile, fell almost five per cent to €95.15.
Low commodities prices have squeezed both farmers and their agrichemical suppliers.
DuPont and Dow Chemical announced a merger worth $130 billion last year and Syngenta accepted a $43 billion buy-out bid from China National Chemical Corp earlier this year, after rejecting Monsanto’s bid. Monsanto, who failed three times to acquire Swiss pesticide-maker Syngenta AG, has found itself the possible target of an acquisition.
The acquisition of the GMO behemoth Monsanto could help the German company boost its seed business, notably in Latin America, while reducing Monsanto’s dependency on the agricultural industry. In March, Monsanto slashed its earnings forecast for 2016.
Bayer is No. 2 in crop chemicals, with an 18 percent market share, according to industry data.
“To compete with the Dow-DuPont merged agriculture business, Monsanto needs a more complete crop-protection offering, which it would get through a combination with Bayer or BASF”, Sanford C. Bernstein & Co. analysts led by Jeremy Redenius and Jonas Oxgaard said Thursday in a note.
Bayer is exploring a potential bid for USA competitor Monsanto in a deal that would create the world’s largest supplier of seeds and farm chemicals, according to people familiar with the matter. The company reported sales of about $15 billion a year ago, a 5 percent decline over 2014.
Monsanto’s stock surged by as much as 20% in premarket trading. The company has held preliminary meetings internally and with advisors on the potential purchase, according to the report, in which the company considered how to finance the deal.
Street Insider said on Wednesday that BASF had retained the services of investment banks to advise on a potential takeover.
BASF, whose shares were down slightly at 68.15 euros, declined to comment. Bloomberg reported citing people familiar with the matter.
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Those persons told Bloomberg no decision had been made yet and that Bayer could ultimately decide not to bid for Monsanto or could opt for joint ventures or other transactions including asset sales.
