BERLIN (AP)—Bayer’s potential acquisition of Monsanto would create a giant seed and farm chemical company with a strong footprint in the U.S., Europe and Asia, combining two businesses with complementary geographical focus.
But Bayer might have to shed part of its business because of anti-trust concerns. And the price tag on any deal would be huge: Monsanto’s market value is around $42 billion.
Germany-based Bayer AG said Thursday in a short statement that its executives had met recently with their Monsanto counterparts “to privately discuss a negotiated acquisition” of the specialist in genetically modified crop seeds.
The news of a potentially costly deal sent Bayer shares tumbling. They were down 8.6 percent at 88.10 euros in afternoon trading Europe time. Monsanto shares were 5.0 percent higher at $101.98 in New York.
Both companies are familiar brands on farms around the globe. Bayer, whose farm business produces seeds as well as compounds to kill weeds, bugs and fungus, said the proposed acquisition would help it “create a leading integrated agriculture business.”
Monsanto, headquartered in St. Louis, Missouri, said it was reviewing Bayer’s proposal. Neither company gave other details.
The possible deal had been rumored for a week but it was the first comment from either company.
“A combination of both companies would create $67 billion of annual sales and the world’s largest seed and crop-chemical company,” analyst Ulrich Huwald at Warburg Research wrote in a research note to investors. “However, the question is if Monsanto would be interested in a deal.”
A combination of the two would have 28 percent of the global market for pesticides and a strong presence in the U.S. corn and soybean seed business.
Source: www.capitalpress.com