Bayer and Monsanto: Biggest cash takeover in history looms

German pharmaceuticals giant puts together $65bn offer for seed firm

160906_bayer.jpg
(Image credit: Volker Hartmann/Getty Images)

The largest cash takeover in history is looking even more likely after pharmaceuticals giant Bayer raised its offer for US seed and pesticide firm Monsanto to $65m (£49m).

Monsanto – described by The Guardian as "the controversial maker of genetically modified seeds" – says it has taken part in constructive discussions with Bayer. The German firm's new offer is its third since May.

The mooted takeover would already have been the biggest cash deal in history, with Monsanto's shares valued at $125 each by Bayer. The latest offer raises that price to $127.50.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

However, there are a few genetically modified flies in the medicated ointment. Experts warn that the combined business might fall foul of competition regulators, whose conditions might devalue the deal, says the Guardian.

One major investor has expressed concern that Bayer might be taking on too much debt – and suggested the merger might not be the best thing for the firm's pharmaceuticals strategy.

Bayer shareholder Greg Herbert of Jupiter Global Equity Income Funds has warned that the takeover poses a "significant risk" and questioned the logic behind the merger.

Herbert told the Guardian: "The company will be left with a highly geared balance sheet and the management effort to integrate the two businesses could easily lead to the larger pharmaceutical business being neglected."

Combining the two firms would create the "world's biggest agricultural supplier", says the BBC. It would become the market leader in Europe, the US and Asia.

With other major players in the sector merging, farmers are concerned that they will face fewer choices and higher prices, says the broadcaster. While the merger remains a serious possibility, it is not guaranteed to go ahead.

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us