Bayer makes offer for Monsanto

BAYER has confirmed that is has made an offer to buy agribusiness giant Monsanto.

Monsanto, which produces a range of seeds and agricultural chemicals, announced late on 18 May that it had received an unsolicited, non-binding proposal from Bayer.

“The board of directors of Monsanto is reviewing the proposal, in consultation with its financial and legal advisors. Monsanto will have no further comment until its board of directors has completed its review,” the company said in a statement, adding that there was no guarantee a deal would be agreed.

Bayer said that executives of the two companies had recently met to privately discuss a potential acquisition, and that buying Monsanto would “reinforce” its leadership positions in core businesses.

Neither company has revealed the potential size of the bid, although Monsanto’s current market capitalisation is in excess of US$42bn, with a share price of around US$97. According to The Telegraph newspaper in the UK, Deutsche Bank analysts believe that Monsanto’s board is seeking an offer of US$150/share.

In May 2015, Monsanto attempted to buy its rival Syngenta for US$45bn. Syngenta’s board repeatedly rebuffed the offers, despite revisions, and Monsanto dropped its takeover bid in August. Monsanto CEO Hugh Grant told investors in October last year that he would continue to seek partnerships and opportunistic deals. He said to the Wall Street Journal that he believed consolidation was “inevitable”. In February, ChemChina agreed to buy Syngenta for US$43bn.