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. Details of the negotiations and the proposed deal were not made public, but a merged entity would be the world's largest seed and agrichemicals company, with a combined market cap of about 130 billion. Monsanto issued a statement Wednesday "in response to recent media reports" to say "it has received an unsolicited, non-binding proposal from Bayer AG for a potential acquisition of Monsanto, subject to due diligence, regulatory approvals and other conditions." The St. Louis, Missouri, company said the proposal was being reviewed by its board of directors and that it will make no further comment until the review is complete. "There is no assurance that any transaction will be entered into or consummated, or on what terms," the short statement added.
Monsanto Co., the world's largest seed company, will reject Bayer AG's 62 billion acquisition bid and seek a higher price, two people familiar with the matter said on Tuesday. Monsanto can see the logic of combining with the German drugs and crop chemicals group, and believes a deal could get the necessary antitrust and other regulatory approvals, the people said, leaving the door open for further negotiations. Bayer will now have to decide whether to raise its bid, even as the company faces criticism from some shareholders that its 122-per-share offer is already too high. The other options are to walk away, or mount a hostile bid. Monsanto shares rose 1.5 percent to 107.61 in late-morning trading in New York, but remain far below Bayer's bid price, underscoring investor skepticism that a deal will be reached.
German drug and crop chemical group Bayer AG on Thursday announced details of a sweetened 64 billion bid for Monsanto Co. as it tries to put the U.S. seed company under pressure to engage further. Analysts and some Monsanto shareholders were quick to opine that Bayer's latest offer, the largest all-cash takeover bid on record, was unlikely to entice Monsanto. Bayer, however, is hoping that the sweetened offer will spur enough Monsanto shareholders to call on the company's management to be more accommodative. Global agrochemicals companies are racing to consolidate, partly in response to a drop in commodity prices that has hit farm incomes. Bayer made its bid for Monsanto public in May, but the two companies have made little progress since in negotiating a deal.
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.
Last year, US pesticide and seed giant Monsanto noisily stalked its Swiss rival Syngenta, in a bold effort to combine the globe's biggest seed company (itself) with the largest maker of insect- and weed-killing chemicals. The effort ultimately flopped, but it set in motion a veritable merger frenzy among the handful of companies that dominate the the global agribusiness trade. Syngenta succumbed to Chinese chemical giant ChemChina, US titans Dow and DuPont combined (in deal still pending regulatory approval), and Monsanto openly salivated over the agrichemical divisions of German giants BASF and Bayer. Now, however, Monsanto has emerged as the hunted party, and it is a European rival--Bayer--that is taking aim. In a Wednesday statement, Monsanto acknowledged "an unsolicited, non-binding proposal from Bayer AG for a potential acquisition of Monsanto, subject to due diligence, regulatory approvals, and other conditions."