Bayer's potential acquisition of Monsanto Co. would create a giant seed and farm chemical company with a strong footprint in the U.S., Europe and Asia, combining two businesses with complementary geographical focus. But Bayer might have to shed part of its business because of antitrust concerns. And the price tag on any deal would be huge: Monsanto's market value is around 42 billion. Germany-based Bayer said Thursday in a short statement that its executives had met recently with their Monsanto counterparts "to privately discuss a negotiated acquisition" of the specialist in genetically modified crop seeds. The news of a potentially costly deal sent Bayer shares tumbling 8.2%.
NEW YORK/FRANKFURT – German drugs and chemicals group Bayer AG made an unsolicited takeover offer for U.S. seeds company Monsanto Co, aiming to create the world's biggest agricultural supplier and integrate pesticides and seeds markets. Monsanto disclosed the approach on Wednesday before Bayer confirmed its move, though neither gave the proposed terms. Sources said Bayer would pay Monsanto shareholders with cash and stock, though the offer price could not be learned. Bernstein Research analyst Jeremy Redenius estimated the price at 41.9 billion ( 47 billion), plus 6.7 billion in assumed debt. He said Bayer might need a 27 billion share issue to help to fund the purchase.
On Tuesday, marriage negotiations between seed/pesticide giant Monsanto and its suitor, German behemoth Bayer, got hotter than a corn field at high noon in late summer. Bayer sweetened its offer to 56.5 billion Tuesday afternoon, just as Monsanto's Board of Directors was scheduled to meet to consider the offer, according to Bloomberg News. The companies could agree to terms as early as Wednesday--but the merger could "still fall apart," the news service reported, adding that "if successful, it would lead to the biggest deal this year and the largest ever by a German company." In its current incarnation, Bayer is mainly a pharmaceutical company, with interests in prescription drugs, over-the-counter staples like aspirin, and animal medicines. But it also has a large division devoted to selling seeds and pesticides--and it has been itching for months to expand those business lines by taking over Monsanto.
PARIS – Three mega-mergers in the agrochemical sector, including Bayer and Monsanto, have raised concerns among farmers who fear higher prices and consumers who fear more genetically modified food. Even before Bayer began trying to woos U.S.-based Monsanto, German civil society had erupted in protest against one of the nation's leading companies acquiring a producer of genetically modified seeds and Roundup, the world's leading, but also, controversial weedkiller that is suspected of being a carcinogen. Meanwhile, ChemChina is tying the knot with Swiss-based Syngenta, and U.S. companies Dow and DuPont are also finishing wedding plans. The three giants born of these mergers will control two-thirds of the global market for seeds and pesticides, two key products for farming. As competition regulators in Europe and the United States weigh the mergers, nongovernmental organizations and advocates of small-scale farming are voicing their concerns.
The rejection comes as no surprise. The offer -- which would be the biggest takeover ever attempted by a German company -- comes amid rapid consolidation in the agricultural chemicals industry. And generous as it seems, it falls flat compared to other landmark deals. Last December, Dow Chemical and DuPont agreed to a 130 billion merger, after which the companies are expected to split into three separate businesses, including one focused on seeds and crop sprays, according to the Financial Times. Then, in February, Swiss competitor Syngenta agreed to a 43 billion takeover by the China National Chemical Corp., or ChemChina.