May 13, 2016

Lynda Kiernan

Germany-based Bayer is reportedly exploring a potential bid for Monsanto Co. according to Bloomberg.

Bayer has conducted preliminary talks regarding a bid for Monsanto which has a market value of $40 billion, and has explored financing options for such a move, including the sale of select assets, unnamed sources revealed to Bloomberg.

No decisions have been reached as of yet, however upon news of Bayer’s interest becoming public, Monsanto’s stock jumped as much as 17.7%  to $106.30 in pre-market trading on May 12, according to Fox Business.

Both companies have been looking to better position themselves in a shifting industry space. Monsanto has been exploring the possibility of either a merger or a takeover to enable the company to better serve farmers that are looking for a ‘one stop shop’ for their input and precision ag needs. Indeed, Monsanto had previously approached Bayer about acquiring its crop science unit, in what would have been a potential $30 billion deal, reports Reuters.

In April, in a move to break Monsanto’s control of the market, Bayer announced it was introducing its latest genetically modified soybean seed in Brazil reports Bloomberg. If a deal to merge the two companies occurs, it would certainly strengthen Bayer’s core seed business, giving it the ability to dominate key global markets.

The news of the potential deal would create the largest seed and agricultural chemical company in the world and would further re-shape the global agricultural sector which has already undergone a rapid transformation in only a matter of months due to market-driven consolidations.

In what would be the largest-ever foreign purchase by a Chinese company, ChemChina has officially made a bid of $43 billion in cash for Syngenta AG.  Under the conditions of the deal, which is scheduled to close by the end of the year, a special dividend of five Swiss francs will be paid upon closing, and ChemChina will retain Syngenta’s management team, with ChemChina Chairman, Ren Jianxin leading a 10-person board including four Syngenta members. ChemChina will also study the possibility of an initial public offering for the company “in the years to come.”

Additionally, after a period of negotiation that began in February, Dow Chemical and DuPont officially announced the $130 billion all-stock, 50/50 mega-merger of the two chemical and agricultural giants to form DowDuPont. The deal is expected to close in the second half of next year if regulatory approval is obtained. Once combined, the two companies, which generated $92 billion in sales, would rank as the second biggest chemical company in the world based on revenue, behind Germany’s BASF reports the New York Times, however, this ranking would be upset by a successful Bayer-Monsanto deal.