German drugs and chemicals group Bayer AG makes an offer to buy U.S. seeds company Monsanto Co for a total value of $62 billion including debt, to create the world's biggest agricultural supplier. Grace Pascoe reports.
What does it cost to become the world's biggest agricultural supplier? German chemicals group Bayer hopes it's 62 billion dollars. That's what they've offered U.S. seeds company Monsanto, with Bayer's new CEO getting straight to work after just 3 weeks in the job. (SOUNDBITE) (German) BAYER AG, CHIEF EXECUTIVE OFFICER, WERNER BAUMANN, SAYING: "In 2050 more than three billion additional people will need feeding. That's six times as many people as live in Europe today and it's one of the great challenges of our time. We're convinced the proposed acquisition of Monsanto can contribute significantly to solving this challenge." Bayer's offering 122 dollars per share - that's a third higher than their stock value prior to news of the deal It would be the biggest ever foreign takeover by a German firm. (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Bayer has to pay a high surcharge for Monsanto so that no other competitor thinks they have to snatch Monsanto away." A tie-up would eclipse a planned combination of Dow Chemical and DuPont's agriculture unit. And Monsanto is yet to comment - last week one shareholder accused Bayer of "arrogant empire-building" There are certainly plenty of obstacles ahead, including U.S. regulators. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "I think there is a specific concern that with U.S. farmers, the supply chain is going to very concentrated within one company, all the way from weed sprays to the genetically modified crops." A drop in commodity prices that has hit farm incomes is behind the race to consolidate But Bayer's stock has taken a hit - it's lost more than 17 percent since the unsolicited proposal first emerged last week.