BERLIN: German chemicals giant Bayer said yesterday that it has offered US$62 billion for United States agriculture group Monsanto as it seeks to create the world’s biggest supplier of seeds, pesticides and genetically modified crops.
In the biggest takeover ever attempted by a German company, Bayer said it made an offer for the American giant of US$122 per share in cash, or a total of US$62 billion.
The move spells a public relations risk for Bayer, especially in Germany, where popular skepticism is high of GM crops and the practice of patenting plant varieties, and where controversy has flared about the health risks of pesticide glyphosate which Monsato markets as Roundup.
Leverkusen-based Bayer hailed the planned merger as “an extraordinary opportunity to create a global leader in the agricultural industry. Monsanto is a perfect match to our agricultural business.”
Bayer’s Chief Executive Werner Baumann said the company would have to “decisively address the point of reputation and challenges of Monsanto in Europe,” adding that “our brand stands for responsibility, transparency and openness.”
The German firm said expected synergies from the merger would result in an annual boost to earnings of about US$1.5 billion after three years.
The announcement came just days after Monsanto said it had received an unsolicited bid from Bayer following weeks of speculation about a possible tie-up. Monsanto has not responded publicly to the latest offer.
According to the Wall Street Journal, the two companies would together account for about 28 percent of global sales of pesticides and herbicides.
Such a mega-merger could raise questions about market dominance, but Bayer said it “has a successful track record of working with global authorities to secure the necessary regulatory approvals.”
The other risk is damage to Bayer’s image if it swallows GM giant Monsanto, which describes itself as one of the world’s leading biotech companies but which has long been a red rag to environmental groups worldwide.
Heike Moldenhauer of German environmental group BUND said the glyphosate issue “should deter Bayer from swallowing a ‘toxic’ company like Monsanto.”
Sahra Wagenknecht of the Linke party said Bayer’s proposed purchase of the “notorious genetics and poison company … is a public menace.”
The Social Democrats’ consumer affairs expert, Elvira Drobinski-Weiss, pointed to Monsanto’s “problematic” business practice of making farmers buy new Monsanto seeds to plant crops, rather than using ones from the previous harvest.
“With this bid, Bayer is signaling it’s highly interested in this lucrative business,” she said.
Low commodity prices have piled the pressure on agricultural suppliers like Monsanto, which in March slashed its earnings forecast for this year.
