US agrichemicals and seeds giant, Monsanto is reportedly considering a massive multi-billon dollar takeover bid from Germany’s Bayer.
If it happens, it will have considerable interest around the world, especially in Australia where both are major suppliers to the agricultural sector and that will see the ACCC vet any deal for possible competition implications.
Should the bid succeed, a combination of the companies would be massive, with $US67 billion in annual sales and be the world’s largest seed and crop-chemical company.
With Monsanto worth $US42 billion alone, an acquisition would likely be bigger than ChemChina’s February deal to buy Swiss agrichemicals firm Syngenta AG for $US44 billion and would face competition obstacles around the world.
These mega deals are passing Australia by – for example, our own agrichemicals giant, Incitec Pivot saw its shares slip more than 1.6% in yesterday’s sell off to $3.375.
It is just not in the same league as Monsanto, but seeing it is a big seller of the key pesticide, glyphosate (Monsanto’s Roundup), it is sure to have a view on the impact of any merger here.
Any deal would have to run the gauntlet of sceptical regulators in the US (which has already rejected several bug deals in the past year) and in the EU (likewise), China, Australia and Brazil.
In a statement yesterday afternoon Monsanto confirmed weeks of rumours that the German chemicals giant had contacted it with an eye to launching a bid.
Reports last week said Bayer was weighing a big that would value Monsanto at around $US40 billion.
Monsanto disclosed the news in a statement which said the proposal as unsolicited and offered no detail on the offer price from the German chemicals and drugs company.
"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. There is no assurance that any transaction will be entered into or consummated, or on what terms,” Monsanto said in the statement.
The moves comes amid a series of deals in the chemicals and agribusiness sectors such as the recent $US130 billion merger between Dow Chemical and DuPont. Last year Monsanto itself made a failed attempt to acquire Sygenta. Sygenta said no and eventually agreed to be bought by unknown Chinese company ChemChina for $US44 billion.
The Financial Times reported last week that in recent months, Monsanto has held informal talks with Bayer and and another German chemicals giant, BASF “about industry consolidation but no agreement was ever made on how they could best join forces. People following those talks said Monsanto had expressed an interest in forming a joint venture with the agrochemical businesses of either of the two German companies.One idea floated was for Bayer to acquire Monsanto and later spin off the combined agribusiness into a publicly traded company, said two people following the situation closely.”
