German life sciences company, Bayer, has made an unsolicited takeover approach to Monsanto, the world’s largest seed maker, with a market value of $42 billion, according to a statement released by Monsanto. Bayer’s takeover approach comes as an attempt to consolidate the global seed and crop chemical industry (1).
In its statement, Monsanto revealed its board is reviewing the proposal, which is conditional on due diligence and regulatory approval. There is no guarantee that any transaction will take place, it said (2).
Monsanto is the market leader in seeds, with a 26 percent market share, followed by DuPont (DD.N), with 21 percent (2). Monsanto unsuccessfully tried to buy Swiss rival Syngenta three times last year (3).
Although no financial details were revealed, any tie-up is likely to be closely scrutinised by regulators over competition concerns. “There is no assurance that any transaction will be entered into or consummated, or on what terms,” Monsanto said in a statement (3).
Currently, market rate for agricultural commodities, such as corn and soybean, are trading at all-time-low prices, hurting farmers’ incomes and also profits at seed and chemical companies. Lower sales of seeds, fertilisers and pesticides have led to higher inventories, forcing companies to cut prices and look at ways to become more efficient (3).
The proposed acquisition is the latest in a series of premium mergers and acquisition deals within the seed and crop-chemicals industry, with a record $84bn of deals this year.
- (1) – Monsanto, seed giant, receives takeover offer from chemicals-maker Bayer – Independant
- (2) – Bayer offers to buy Monsanto in global agrochemicals shakeout – Reuters
- (3) – Bayer makes takeover offer for agriculture giant Monsanto – BBC News