In its pursuit of the U.S.-based seeds giant Monsanto, Bayer has raised its takeover offer to about $65 billion. It made a $62 billion offer in May after Monsanto failed in its own bid to buy the Swiss crop chemical and seed firm Syngenta. Bayer and Monsanto are now holding “advanced negotiations,” according to Bayer, and appear to be close to a deal.
If the two firms agree, the combination will create an agricultural behemoth with more than $25 billion in annual sales. The agriculture company that will result from the planned merger of Dow Chemical and DuPont, in contrast, will have about $16 billion in sales.
The two deals, plus ChemChina’s pending acquisition of Syngenta, leave BASF as the only large agriculture player not involved in a major tie-up with another company. However, to satisfy anti-trust regulators, its competitors will be required to sell some number of overlapping businesses, creating a second path for BASF to grow.
“The agrochemical market is evolving, and we are actively pursuing opportunities arising from ongoing merger efforts to increase our footprint and value offer,” said Markus Heldt, president of BASF’s crop protection division, at a media event this week.
There will be opportunities for BASF to shop for additions to its portfolio, but, it too could end up attracting scrutiny, cautions Laurence Alexander, a chemicals analyst at the investment bank Jefferies.
“BASF would likely be able to pick up some herbicide and insecticide assets but would likely face its own regulatory push-back in fungicides,” Alexander wrote in a note to investors.
Heldt said BASF will continue to invest around 10% of sales in R&D. Such investment helped increase sales of the company’s crop protection products by 75% over the past decade to $6.5 billion, Heldt said, adding that the growth should continue. He highlighted a new triazole-class fungicide called Revysol, which will provide farmers with a new mode of action against diseases such as rust in cereal crops.