Is it a surprising move or not? Time will tell but the latest bid by Bayer for Monsanto is certainly interesting, not to mention the somewhat obscure reasons from Bayer behind the move – consolidation and “combine Monsanto’s No. 1 position in seeds and crop genetics with Bayer’s prowess in pesticides to create a truly global agriculture leader”. This sounds a lot like the mantra of Mike Mack in combining the chemical and seed businesses of Syngenta which was a complete disaster.
The unsolicitored bid comes just a few months after the sale of Syngenta to ChemChina, which was hot on the heals of a rather protracted failed takeover attempt from Monsanto resulting in the exiting of Syngenta CEO Mike Mack. The proposed deal includes assuming the $8 billion Monsanto debt.
The bid by Bayer has many hurdles to overcome from US regulators and is likely to take sometime to push through which, if you follow some of the reported comments (WSJ, Bloomberg), least of all the less than approving comments reportedly coming from Bayer shareholders who believe the debt created by Bayer in its bid will be just too much for the company to handle. Bayer are also saying that the final bid may cost 25% more as a result from takeover costs. Nonetheless it will be interesting to see what Bayer follows up with in pushing their takeover bid and whether parts of Monsanto will be scheduled to be sold despite their “holistic” comments. Bayer CEO is on record as saying that both the seed and GM businesses are an integral part of their future plans.
Finally, there is no comment from Monsanto on the bid, so the deal has a long way to go. Incidentally, while news of the bid have just surfaced in the last few days, the bid was actually rumoured some weeks back.