It all started when Monsanto made a run at Syngenta with an offer that was later rebuffed - though it is interesting to look back on the reasoning. In the interim, Syngenta eventually was purchased by ChemChina - and that deal is still pending and questions have been raised by many groups including the Obama Administration. Then it was Dow-DuPont - which are joining forces, to later break up into three entities.
Now comes word that Bayer has made an offer to purchase Monsanto, with the potential creation of a $67 billion crop technology giant that would make it the largest player in seeds, crop protection and biotech. The Wall Street Journal carried the full story explaining some key details, and concerns.
Bayer issued a release last week confirming the news with the note that 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."
NOTE: Early Monday, May 23, Bayer came forward with public details about its offer to Monsanto. The price - $62 billion represents $122/share which is a 37% premium over the current share price - over the price the day the offer was made. And Bayer says this is an all-cash offer. Our friends at Farm Futures have more details.
UPDATE: This week the Wall Street Journal carried a story with investor concern about the move. Those buying into Bayer as a pharmaceutical play are concerned that the pendulum moving toward ag and biotech may not be in their best interest. And the added debt is a concern. Subscribers can check out the full story online. The key is that the Monsanto purchase will dramatically shift Bayer's direction toward GMO tech and agriculture and away from pharmaceutical development, there's also concern that the debt will limit the pharma pipeline (the key to the future for any drug company).
UPDATE: Monsanto spurned the Bayer offer calling it "incomplete and financially inadequate," but didn't slam the door in Bayer's face. In the National Public Radio report Monsanto is quoate as believing there can be "substantial benefits" from an integrated strategy.
In its statement responding to Monsanto, Bayer AG CEO Werner Baumann comments: "We are pleased that Monsanto's Board shares our belief in the substantial benefits an integrated strategy could provide to growers and broader society. We are confident that we can address any potential financing or regulatory matters related to the transaction. Bayer remains committed to working together to complete this mutually compelling transaction."
You can learn more about Bayer's position on a special website - advancingtogether.com.
Falling farm income numbers have put a crimp into the balance sheets of a lot of companies. Monsanto is said to be cutting its workforce 16% globally. The Bayer move offers interesting options, but could also see some divestitures. The Wall Street Journal supposes that Liberty technology may have to be divested, and the two companies are big players in the cotton market.
CNN carries a report on the proposed merger it calls Monsanto-Bayer mega-deal a nightmare for America?
And a St. Louis Post-Dispatch story run recently calls into question the cost cutting this merger would require of Monsanto.
A Reuters report looks at the issue noting that Bayer would be taking on sizeable debt if it purchases Monsanto. With any merger there are questions that to be raised, and with Dow-DuPont and Sygenta-ChemChina already under scrutiny, moving forward with the Bayer-Monsanto deal could be a challenge.