German chemical and pharmaceutical multinational Bayer AG is considering a potential bid for US firm Monsanto Co in a deal that would create the world’s largest supplier of seeds and farm chemicals, according to a Bloomberg report.
The report on 12 May quoted people familiar with the company who said Bayer had held preliminary discussions internally and with advisers about buying Monsanto, which was valued at about US$43bn.
Bayer, valued at about US$90bn, had discussed how to finance a deal but no final decision had been made and it could decide not to make a bid or pursue other transactions with Monsanto, including joint ventures or asset sales, the people said in the Bloomberg report.
A Monsanto-Bayer combination was unlikely to raise significant antitrust hurdles because there was little overlap in the companies’ products, analysts said in the report.
Monsanto is the world’s largest seed maker and also owns the Roundup brand herbicide while Bayer CropScience has products in crop protection, seeds and plant biotechnology.
The crop-chemicals industry has recently experienced a wave of consolidation, with competition authorities investigating the US$130bn merger between Dow Chemical Co. and DuPont Co, and US national security officials weighing China National Chemical Corp’s bid to acquire Switzerland’s Syngenta AG of for US$43bn.
Monsanto failed to acquire Syngenta for about US$45bn last year (see Biotech News, OFI June 2015) and had explored possible deals with Bayer as well as German competitor BASF, people familiar with the matter said in March.
With a global slump in agricultural commodities hurting demand for everything from tractors to weedkiller, a deal with Bayer would help Monsanto reduce its reliance on the agriculture industry, while Monsanto would strengthen Bayer’s seed business, one of the company’s priorities, the Bloomberg report said.
An update on this news story can be seen here