A German company is making a play for St. Louis-based Monsanto. Bayer has made an unsolicited, non-binding offer for the global agricultural company.
Monsanto says its board of directors is reviewing the proposal and there is no assurance any offer will be accepted. Bayer says the combination would create a "leading integrated agriculture business."
Confirmation of the offer comes hours after Monsanto President and Chief Operating Officer Brett Begemann described talk about any possible takeover as "wild speculation because there is nothing there." He made the comment to Reuters Wednesday in New York City.
Word of a possible takeover for Monsanto started to emerge last week. That's when the managing director of an investment consultancy, focusing mainly on the agriculture chemical sector, told St. Louis Public Radio a Bayer-Monsanto combination could follow the lead of a pending merger between Dow Chemical and DuPont.
"Bayer could always have the option of spinning out, of splitting up the company into two parts. Almost like the Dow-DuPont thing. Combine your ag and spin it out as a separate enterprise," said Bill Young of ChemSpeak.
Another German company, B-A-S-F, is also believed to be considering making an offer for Monsanto which could give that company a chance to break into new markets.
"It would also provide more geographic diversification for B-A-S-F," said Young.
"And it would tend to offset, at least to some degree, the cyclicality of the rest of their businesses, chemicals and plastics and so forth."
A merger of Bayer and Monsanto would result in the largest farm chemicals and seed supplier in the world.
"Bayer is relatively stronger, more diversified in crop protection chemicals (pesticides, et al.) and fairly weak in seeds, although they are in the business. Just the reverse for Monsanto. Not a bad fit," said Young when reached by email Thursday shortly after confirmation of the offer.
"Ultimately, Bayer may split into two parts — health care and ag. Having Monsanto in the fold would bolster the value of the ag."
Young cautioned that everything at this point is essentially speculation.
"Whether Bayer and Monsanto get together remains to be seen, of course."
Local Reaction
St. Louis officials didn't seem too worried about the news that Monsanto is a takeover target.
"This is not, on its face, bad news for St. Louis," said St. Louis Regional Chamber President and CEO Joe Reagan. "I think everybody should take a step back and look and see what a success this is for the community and not rush to judgment on what it means going forward."
"When a community has the talent and the ability to help a company grow, when ownership changes it's new capital coming into that company, they're not looking to make major changes in where talent goes. Life and plant sciences are well rooted in St. Louis," Reagan told St. Louis Public Radio on Thursday.
"It's business, it's the economy. Monsanto has reinvented itself as a company four or five significant times in its history, and all the times St. Louis was always the place that it calls home."
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