Monsanto (MON) Stock Surges on Bayer Takeover Talks
Shares of the Monsanto Company Inc. (MON) were up +12.82 or +14.19 percent to $103.16 in Thursday’s premarket after news that it’s German competitor Bayer AG was considering a potential bid for the company. Monsanto stock closed at $90.34, down -0.84 or -0.92 percent in Wednesday’s regular trading session.
Creve Coeur, Missouri based Monsanto Company Inc. was founded by John Francis Queeny in 1901 and was originally a producer of food additives such as vanillin and saccharine.
Monsanto’s principal products are glyphosate herbicides which were developed in 1970 and are currently marketed under the Roundup brand. Monsanto’s other main products are genetically modified crop seeds. The company is also the world’s largest supplier of non-GMO vegetable seed with over 4,000 seed varieties from more than 20 species.
Leverkusen, Germany based Bayer AG was founded in 1863 and originally produced acetylsalicylic acid, which it trademarked as Aspirin. Nevertheless, the trademark was lost in the United States, UK and France as a result of the company’s U.S. assets being forfeit during World War I. The company also trademarked Heroin and marketed the drug as a cough suppressant. The company has since become a major multinational pharmaceutical and chemical company. Bayer is also a major producer of pesticides through its CropScience segment.
According to sources which remain anonymous due to the private nature of the talks, Bayer has been conducting internal discussions and with advisors about making a bid for Monsanto, which has a valuation of almost $40 billion. Bayer has been exploring how to finance a deal that could include a sale of assets.
There has been no final decision on Bayer’s part and the company could still pursue other options including buying assets from Monsanto, a joint venture or other arrangement. Neither company commented on the potential transaction.
Back in March, sources said Monsanto was exploring possible deals with Bayer and its major German competitor BASF SE. The companies discussed a variety of options including the sale of all or part of Bayer’s crop science business to Monsanto, as well as the option of combining both companies. At the time, Monsanto said it was not interested in selling the company to Bayer and that it was more on the acquiring side of a deal.
A merger of the two companies would produce the world’s largest supplier of seeds and farm chemicals and follows last year’s $130 billion deal combining DuPont (DD) and Dow Chemical (DOW). More recently, ChemChina bought Sygenta for $43 billion, further consolidating the industry.
Monsanto stock was up +17.7 percent after news of the potential deal broke this morning, the share price has since declined and the stock is trading just over $100 per share at the time of this writing. While no formal announcement has been made, a bid by Bayer would possibly make BASF consider making an offer for Monsanto.
Other News About MON
Monsanto May Pull Its Biotech Soybean Seeds From Argentina
Monsanto cited difficulty in collecting royalties and the decline in the country’s currency as the main factors for pulling its seeds.
Monsanto cuts forecast for Roundup Ready 2 Xtend soy acres in US
Monsanto has not yet received approval for the GMO seeds in the European Union.
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