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Bayer offers to acquire Monsanto

May 19, 2016
Chemical Value Chain

Seed giant Monsanto announced late on 18 May that it has received an unsolicited, non-binding proposal from Bayer for a potential acquisition of Monsanto.

Bayer also confirmed that it recently met with executives of Monsanto to privately discuss a negotiated acquisition of Monsanto. The announcement follows press reports last week that Bayer and BASF are each eyeing Monsanto. The board of directors of Monsanto is reviewing the proposal from Bayer, in consultation with its financial and legal advisors, and there is no assurance that any transaction will be entered into or consummated, Monsanto says. Monsanto says it will not comment further until its board has completed its review. Morgan Stanley & Co. and Ducera Partners are acting as financial advisors, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor, to Monsanto, the company says.

According to press reports, Monsanto has a market capitalization of $42 billion and the proposed acquisition of Monsanto by Bayer could be valued at over $42 billion. Monsanto, in the fiscal year ended 31 August 2015, reported sales of about $15 billion. The company produce seeds for fruits, vegetables and key crops such as corn, soybeans, and cotton.

The agricultural chemicals industry is consolidating. China National Chemical Corp. (ChemChina; Beijing) is in the process of acquiring agricultural chemicals company Syngenta (Basel) for $43 billion through tender offers. Syngenta has agreed to ChemChina’s takeover bid. In August 2015, Monsanto dropped plans to acquire Syngenta after its offer was rejected. The planned merger of Dow Chemical and DuPont is also driven by the weak agchems market.

Bayer says that the proposed combination with Monsanto would create a leading integrated agriculture business.

If the Bayer-Monsanto deal is successful, the combined company would have annual sales of about $67 billion. Bayer is a company that focuses on the life science fields of health care and agriculture. In fiscal 2015, Bayer had sales of €46.3 billion ($51.8 billion). These figures include those for the high-tech polymers business, which was floated on the stock market as an independent company, Covestro, in October 2015.

By Deepti Ramesh

Source: Chemical Week

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