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Bayer in talks to buy US agrochemical company Monsanto

By: Pharma News | Views: 1488 | Date: 19-May-2016

German pharmaceutical giant Bayer is considering making a bid to buy American agrochemical company Monsanto, Bloomberg reports. With Monsanto’s $40 billion market cap, the combined enterprise would become the largest supplier of farm chemicals and seeds.

Bayer in talks to buy US agrochemical company Monsanto

German pharmaceutical giant Bayer is considering making a bid to buy American agrochemical company Monsanto, Bloomberg reports. With Monsanto’s $40 billion market cap, the combined enterprise would become the largest supplier of farm chemicals and seeds.

German drug giant Bayer said today it was in talks to acquire US agriculture group Monsanto, after weeks of speculation about a possible tie-up. 

"Bayer executives recently met with executives of Monsanto to privately discuss a negotiated acquisition of Monsanto Company," the company said in a statement. 

"The proposed combination would reinforce Bayer as a global innovation-driven Life Science company with leadership positions in its core segments, and would create a leading integrated agriculture business," it added. 

Bayer's statement, which said that discussions were still "preliminary", followed one issued late last night by Missouri-based Monsanto. 

"In response to recent media reports, Monsanto Company disclosed that it has received an unsolicited, non-binding proposal from Bayer for a potential acquisition of Monsanto, subject to due diligence, regulatory approvals and other conditions," Monsanto said. 

Monsanto shares had surged last week following reports it could receive a takeover bid from Bayer for $40 billion or more.

Neither statement mentioned how much any proposed deal would be worth. 

Monsanto, a major manufacturer of agricultural seeds and herbicides, employs about 20,000 workers and is one of the world's leading biotechnology companies. 

Bayer, which employs around 117,000 workers, had global sales in fiscal year 2014 of €46.3 billion. 

Global agricultural suppliers like Monsanto have been pressured by low commodity prices that have caused farmers to cut orders for supplies. 

In March, Monsanto slashed its earnings forecast for 2016. 

Sluggishness in the industry has also sparked deals such as a mega-merger between DuPont and Dow Chemical. 

Switzerland's Syngenta last year rejected an unsolicited offer from Monsanto, later agreeing to be bought by China National Chemical Corp for $43 billion.

The German drugs and chemicals group Bayer has pounced on Monsanto, the world’s biggest seed company, with an unsolicited takeover offer likely to be worth more than $40bn (£27bn).

Bayer, which invented aspirin in the 19th century, said executives from both companies had met to “privately discuss a negotiated acquisition of Monsanto Company” to create a “leading integrated agriculture business”.

Combining the two companies’ operations would create a giant business making drugs such as Yasmin birth control pills, pesticides and seeds for genetically modified crops.

Monsanto confirmed an unsolicited takeover proposal from Bayer and said its board was reviewing the offer with its financial and legal advisers.

Monsanto, based in St Louis, Missouri, has a market value of $42bn. Last year, the company failed in an attempt to buy the Swiss pesticides firm Syngenta for $47bn and has since itself become a takeover target, with global crop prices falling. The German chemicals company BASF is also known to be interested.

Syngenta agreed to be bought by the state-backed China National Chemical Corporation in February. The $43bn deal – the largest foreign acquisition ever by a Chinese company – is being scrutinised by US regulators amid concerns about the security of the US food supply.

A deal between Bayer and Monsanto could also raise antitrust concerns in the US because there is overlap between their seeds businesses, particularly soybeans, cotton and canola.

Monsanto is thought to have approached Bayer earlier this year to sound it out about buying or forming a joint venture for its crop science division.

German pharmaceutical giant Bayer is considering making a bid to buy American agrochemical company Monsanto, Bloomberg reports. With Monsanto’s $40 billion market cap, the combined enterprise would become the largest supplier of farm chemicals and seeds.

The deal is likely to raise many questions from competitors and authorities.


“Trying to do this merger is like going sailing in a tsunami. This is going to raise real significant concerns at the Justice Department,” a former departmental lawyer who has worked on behalf of farmers, David Balto, told the Financial Times.

The possible merger comes after Monsanto failed to acquire its rival, Switzerland’s Syngenta for about $46.2 billion last August. Syngenta was bought by ChemChina for reported $44 billion.

According to the FT sources, Monsanto held informal talks with two German chemicals companies – Bayer and BASF about the industry future, but no agreement on consolidating forces has been reached.

However, Monsanto doesn’t want to become a branch of a German company.

“Monsanto has no interest in being swallowed by a German group, it wants to remain American,” a person close to company management told the FT.

Another merger in the industry, the $130 billion deal joining Dow and DuPont, has made Monsanto’s position weaker in the market, paving the way for its negotiations with the German chemical producers.

Monsanto shares gained as much as 12 percent on Thursday on news of the potential merger.

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