Reports BASF in talks with Monsanto

DISCUSSIONS over the future of Monsanto have taken a new turn according to reports, with BASF lined up as a possible partner in the ongoing consolidation of the agrochemicals sector.

Monsanto is in early discussions about buying BASF’s agricultural-solutions unit, reports Bloomberg, citing people familiar with the matter. The move comes after Monsanto rejected a US$62bn buyout by BASF’s German chemicals rival Bayer earlier this year.

The agrochemicals market has witnessed consolidation among its top players. Dow and DuPont are currently working through the details of a US$130bn merger agreed in December, while earlier this year ChemChina has agreed to buy Syngenta for US$43bn.

Interest from BASF for a deal with Monsanto is expected to strengthen the company’s negotiating position with Bayer, after it rejected its earlier bids as too low. However, one of Bloomberg’s contacts noted that Monsanto may face pressure from shareholders if it opts for a tie-up with BASF that dilutes its shareholding over an all-cash deal with Bayer.

In its pitch to merge, Bayer said the combined business would benefit from Monsanto’s strengths in seeds and its own in crop protection chemicals. If a deal did happen, and following on from last year’s spin-out of its materials science business, Bayer will have shifted from predominantly a pharmaceutical company – worth two thirds of sales in 2015 – to an even split with crop science.