Friday, May 13, 2016

Bayer pondering bid for Monsanto

Bloomberg News reports that Bayer AG is pondering a bid for Monsanto.

Bayer is worth about $116 billion Cdn and Monsanto about $55 billion, based on stock market prices.

If a deal is made, it would create the world’s biggest supplier of seeds and farm chemicals. 

Monsanto is the world’s largest seed maker and also makes Roundup. Bayer, which invented aspirin, makes herbicides, insecticides and fungicides.

"There’s only six companies that have over $5 billion ($6.45 billion Cdn) in sales in these markets and three of them are already involved in deals," said Bloomberg Intelligence analyst Jason Miner. 

"Even if the products aren’t directly overlapping, it’s a shrinking list of players."

Senator Chuck Grassley, a Republican from Iowa, asked antitrust officials in March to closely examine how the Dow-Dupont and ChemChina-Syngenta combinations could reduce choice for U.S. farmers and hurt innovation. 

Grassley is also among a group of senators who are asking the Committee on Foreign Investment in the U.S. to review how ChemChina’s purchase of Syngenta could impact U.S. food security.

The main product overlap between Bayer and Monsanto is in weed killers, which is only a small part of Bayer’s portfolio, (so) divestitures may be enough to satisfy competitive concerns, said Miner.

"From the antitrust side, I don’t think there’ll be many issues," said Lutz Krafft, a senior adviser at consulting firm ChemAdvice GmbH who once worked at Bayer. "The overlap is very low."