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Bayer Sweetens Monsanto Bid Again as Takeover Talks Advance

02:20AM Sep 06, 2016

Bloomberg_Seeds( Jasper Juinen/Bloomberg )

Bayer AG sweetened its takeover bid for Monsanto Co. a second time as the German chemical company said it’s in advanced talks to snare the U.S. seed giant in what would be the largest agriculture-related takeover.

Bayer would be prepared to pay $127.50 a share, 19 percent more than St. Louis-based Monsanto’s last close of $107.44 and 2 percent more than its previous bid, provided “a negotiated transaction” can be reached, Bayer said Monday in a statement. There is no assurance parties will reach agreement, Bayer said. Monsanto couldn’t be immediately reached for comment.

Buying Monsanto would give Bayer a company that’s both the world’s largest seed supplier and a pioneer of crop biotechnology. The kind of genetically modified seeds that Monsanto started to commercialize two decades ago now account for the majority of corn and soybeans grown in the U.S. Monsanto also sells seeds in foreign markets including Latin America and India.

The offer from Bayer marks a reversal of roles for the U.S. company. Monsanto has long sought to become a one-stop shop for farmers by boosting its crop chemicals portfolio to complement its seeds business. To that end, it had pursued the purchase of Syngenta AG on at least three separate occasions over the years.

Previous Offers

Bayer made an initial $122-per-share bid in May and raised the proposal to $125 in July. Monsanto rejected those two offers as too low, but later allowed Bayer access to its financial accounts to conduct due diligence as it weighed a revised bid. Monsanto may be willing to come to the table for $130 a share, Argus Research analyst Bill Selesky said in June. Analysts at Sanford C. Bernstein said the company may decide to sell if Bayer raises its offer to $135 a share.

The crop and seed industry is being reshaped by a series of large transactions that may end up leaving just a few global players who can offer a comprehensive range of products and services to farmers. China National Chemical Corp. agreed in February to acquire Syngenta. Meanwhile, DuPont Co. and Dow Chemical Co. plan to merge and then carve out a new crop-science unit.

Monsanto previously pursued Syngenta, calling off its bid last year, and more recently it has revived talks to buy BASF SE’s agrochemicals unit. The wave of consolidation may leave just a few large global players that offer a comprehensive range of products and services to farmers.

Falling crop prices have weighed on Monsanto’s profits and share price in the past year, making it vulnerable to a takeover.

The company was founded in 1901 and its first product was saccharin, the artificial sweetener. It produced highly toxic polychlorinated biphenyls, known as PCBs, until the late 1970s, and was also among companies to manufacture the mixture of herbicides known as Agent Orange. In the past two decades it has pioneered the commercialization of genetically modified organisms, or GMOs. GMO varieties of corn and soybeans now account for the majority of those crops in the U.S.