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Bayer Confirms Offer to Buy Monsanto

May 18, 2016

4 Min Read
Bayer Confirms Offer to Buy Monsanto
The Bayer AG cross logo

Monsanto and Bayer AG confirmed media reports that the German pharmaceuticals and chemical company has made an offer to purchase the St. Louis-based agricultural product giant in separate statements issued Wednesday.

Noting that Bayer’s proposal was “unsolicited” and “non-binding,” Monsanto said its board of directors were reviewing the potential takeover with its financial and legal advisors.

“Monsanto will have no further comment until its board of directors has completed its review. There is no assurance that any transaction will be entered into or consummated, or on what terms,” the company said in its release.

Monsanto, the world’s largest seed company and producer of herbicides like RoundUp, has a market value of $42 billion.

Bayer’s statement, released after Monsanto’s, made it clear that it aims to expand its agriculture business.

“The proposed combination would reinforce Bayer as a global innovation-driven Life Science company with leadership positions in its core segments, and would create a leading integrated agriculture business,” the company said.

The German company said it would make another statement “as appropriate.”

The Wall Street Journal’s coverage of the offer observed that Bayer’s takeover of Monsanto could dramatically impact the German company’s sales of agricultural products, which makes up about 22% of Bayer’s sales.

“Monsanto’s $15 billion in seed and herbicide sales could make agriculture about 40% of the combined entity’s business, with the rest coming from pharmaceuticals and consumer health products,” the Journal said.

Pointing out that the discussions between the companies are taking place during a “record-setting” period of consolidations in the global chemicals sector, Bloomberg News said data gathered by its staff showed that Bayer’s successful purchase of Monsanto “could surpass ChemChina’s purchase of Syngenta as the largest acquisition globally this year.”

2016 has already seen $84 billion in deals in the global chemicals sector, Bloomberg said, a result of low crop prices driving mergers.

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