Bloomberg
Monsanto, the world's largest seed maker with a market value of US$42 billion, says it has received an unsolicited takeover approach from Germany's Bayer, the latest step in the consolidation of the global seed and crop chemical industry.
The proposal was non-binding, St Louis-based Monsanto said Thursday, without giving financial details. Monsanto’s board of directors is reviewing the proposal in consultation with its advisers, and there’s no assurance that any deal will be entered into, it said.
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. A wave of deals is already reshaping the seed and crop-chemicals industry. Chinese National Chemical agreed in February to acquire Switzerland’s Syngenta for about $43bn, months after Monsanto abandoned its own bid for Syngenta. DuPont and Dow Chemical plan to merge in a $65.6bn deal and then carve out a new crop-science unit.
A completed acquisition would extend a record-setting pace of consolidation in the global chemicals sector, which has seen $84bn of deals this year as low crop prices encourage mergers, according to data compiled by Bloomberg. With a premium, a takeover of Monsanto could surpass ChemChina’s purchase of Syngenta as the largest acquisition globally this year, the data show.
“Despite the ongoing consolidation in the agrochemicals market, we believe there is no need for Bayer to rush into a deal with Monsanto,” Bankhaus Lampe KG analyst Volker Braun said in a research note. “We see enough opportunities arising from pending M&A transactions in the industry to buy assets at better prices and more favorable risk profiles.”
Monsanto is facing a slump in agricultural commodities and its offer to buy Syngenta for about $46.2bn was spurned last year. Sales in the quarter ending in February fell 13 per cent from a year earlier to $4.53bn. Prices for corn and soybeans declined in the last three calendar years, hurting demand for everything from tractors to weedkiller.
A deal with Bayer would help the company reduce its reliance on the agriculture industry, while Monsanto would strengthen Bayer’s seed business, one of the company’s priorities.
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