Friday, May 20, 2016

Bayer looks to acquire Monsanto; would make agriculture 40% of combined entity’s business

"Bayer AG has approached Monsanto Co. about a takeover that would fuse two of the world’s largest suppliers of crop seeds and pesticides, the companies said," Jacob Bunge and Dana Mattioli report for The Wall Street Journal. "Details of the offer couldn’t be learned and it was unclear whether Monsanto would be receptive to it. Should there be a deal, it could be valued at more than $42 billion, which is Monsanto’s current market capitalization. Should the bid succeed, a combination of the companies could boast $67 billion in annual sales and create the world’s largest seed and crop-chemical company."

Mergers an acquisitions are booming in the industry. Last month Sygenta struck a deal to be acquired by Chem China, a state-owned enterprise. DuPont and Dow have announced they are merging. If all the deals go through, it's estimated that three of these companies will control more than half of global seed sales, Dan Charles reports for NPR.

If Bayer absorbed St. Louis-based Monsanto, the world’s top seed company in terms of sales, it "would push Bayer far more deeply into agriculture, which currently accounts for about 22 percent of the German company’s business," Bunge and Mattioli write. "Monsanto’s $15 billion in seed and herbicide sales could make agriculture about 40 percent of the combined entity’s business, with the rest coming from pharmaceuticals and consumer health products."

"Folding Monsanto’s world-leading seed franchise and its trademark Roundup herbicide business into Bayer would create a company that could market products ranging from Aspirin pain-relief pills to crop genetics that enable plants to withstand bugs and weedkillers," Bunge and Mattioli write. "The combination would sell about 28 percent of the world’s pesticides and about 36 percent of U.S. corn seeds and 28 percent of soybean seeds, according to Morgan Stanley estimates." (Read more)

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