Bayer Considers Monsanto Takeover, May Sell Assets to Finance It: Report
German chemical giant Bayer is looking into a bid for American agro-behemoth Monsanto, Bloomberg reported.
Bayer is leading “preliminary discussions” internally and with advisers, according to Bloomberg sources. It is considering how to finance the deal, including possible assets sales.
If successful, the Bayer and Monsanto agriculture businesses would combine to beat Syngenta as the top seeds and pesticide company, based on data from Statista.com.
Both companies responded to inquiries saying they don’t comment on market speculation.
Investors seem to think the deal would be in Monsanto’s favor.
While Monsanto’s stocks rose some 10 percent Thursday morning, Bayer’s dropped almost 5 percent.
Monsanto’s last year was rather unimpressive on paper. Its net sales were down 5 percent while its net income dropped 16 percent.
Bayer is valued at over $94 billion while Monsanto at close to $40 billion, according to MarketWatch.com.
The takeover may allow the companies to better tackle the competition after two major consolidations in the sector in recent months.
Last year DuPont and Dow Chemical announced a merger that would create a $130 billion giant, if approved by regulators.
Earlier this year, China’s ChemChina bought Swiss Syngenta for $43 billion.
Monsanto sought deals with Bayer and BASF, another major player in the industry, in March, Bloomberg reported. Monsanto was interested in the crop-science businesses of the other companies.
Bayer, based in Leverkusen, Germany, has more than 150 years history. It is perhaps best know for introducing aspirin to market and trademarking its name—although its U.S. trademark was confiscated by the government during World War I. It is perhaps less known that Bayer also introduced heroin to market and trademarked the name as a cough medicine. With the help of a series of acquisitions, it became one of the major pharmaceutical companies in the world.
Monsanto, based in St. Louis, is one of the world’s largest agrochemical and biotechnology company. It has been a frontrunner in the genetic modification of plants, while its best known product is Roundup, a glyphosate-based pesticide—the most commonly used one in the U.S.