Bayer in move to entice Monsanto

In a statement released today, it said it was prepared to offer USD$127.50 per Monsanto share, which would translate at around $65bn in terms of the overall purchase price for the global seed player.

Monsanto also acknowledge that it has been engaged in “constructive negotiations”​ with Bayer in relation to a potential takeover.

However, the US agri-giant stressed there was no certainty any deal would occur.

Monsanto added that it intends to continue such dialogue with Bayer as it evaluates the latest proposal, but will also assess offers from other parties and strategic alternatives that would be in the best interest of shareholders.

In May, Werner Baumann, CEO of Bayer, said the Germany group was confident it can “address any potential financing or regulatory matters” ​related to the Monsanto deal.

And, also, when confirming its intention to buy the controversial company that month, Bayer said farmers in Asia Pacific, North America and Europe would benefit from the broad product portfolio and the deep R&D pipeline from such joined up operations.

In July, the US company rejected an offer from Bayer of $125 per Monsanto share but said it was opened to further talks. 

Potential merger may violate anti-trust laws 

However, a white paper​​ produced by the Konkurrenz Group, a Washington-based law firm specialized in mergers and acquisitions, raised significant concerns regarding the legality of a Bayer-Monsanto deal.

The proposed merger would violate anti-trust regulation in the US and the EU as well as severely restricting choice and options for both farmers and consumers in a market already dominated by a few large players, noted the US lawyers in the publication, which was released in July.

The amalgamation of the two companies would violate a court order that was part of a US Department of Justice consent decree and the primary US anti-trust merger statute, the Clayton Act, they wrote.

The merger would eliminate direct competition between two of the largest players in the farm supply and seed sector – directly affecting seed development, herbicide markets, and innovative research and development. There would likely be less choice and higher food prices for consumers, noted the anti-trust specialists.

Industry consolidation trend

Low crop prices globally for the past three years have been forcing farmers to scale back on spending, and the challenging market conditions have been encouraging consolidation on the seed and pesticide business side.  

December saw DuPont and Dow Chemical merge and early this year Monsanto tried to engage Syngenta in renewed discussions on combining the two companies.  

And last month saw the US national security regulator approve ChemChina’s planned $43bn takeover of that Swiss seed player.

The Chinese group now awaits EU regulatory authorization for the acquisition. Industry analysts said the deal would give China, with its expanding middle classes and inefficient agriculture system, a leg up in terms of intellectual property around seeds and pesticides.