The German drugs and chemicals group
Bayer has pounced on Monsanto, the world’s biggest seed company, with an unsolicited takeover offer likely to be worth more than $40bn (£27bn).
Combining the companies’ operations would create a giant business making drugs such as Yasmin birth control pills, pesticides and seeds for genetically modified crops.
Monsanto confirmed an unsolicited takeover proposal from Bayer and said its board was reviewing the offer with its financial and legal advisers.
Prof John Colley of Warwick Business School said: “Monsanto certainly do not want to be bought by a European business. However, shareholders always have their price. No doubt Monsanto will reject the bid, but it will need to convince its shareholders that it has seriously considered the offer. A higher bid is likely.
“Demand is poor for agribusiness products currently due to low commodity prices. Overcapacity has led to poor performance and lower share prices, in turn providing opportunities for mergers.”
Syngenta agreed to be bought by the state-backed China National Chemical Corporation in February. The $43bn deal – the largest foreign acquisition ever by a Chinese company – is being scrutinised by US regulators amid concerns about the security of the US food supply.
A deal between Bayer and Monsanto could also raise antitrust concerns in the US because there is overlap between their seeds businesses, particularly soybeans, cotton and canola.
Monsanto is thought to have approached Bayer earlier this year about buying or forming a joint venture for its crop science division.
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