Monsanto Enters Discussions to Acquire Bayer Crop Sciences

Monsanto recently lost a bid to take over Swiss pesticide company, Syngenta, one if its largest competitors. Instead, China National Chemical Corporation (Chem China) successfully bought out Syngenta for a whopping $43 billion cash offer. Still, that hasn’t stopped the world’s largest seed company from trying to take over yet another biotech company – the crop sciences unit of Bayer AG is in Monsanto’s sight.

Monsanto may have monopolized the GM seed market; but chemical companies Bayer AG, BASF SE, and Dow Chemical are larger players in the overall biotech picture. The EU is now stalling on giving Monsanto’s best-selling herbicide, Roundup, further authorization for sale in member states. In view of these difficulties, the company may be looking for other ways to boost its drastically sagging sales.

As Fool.com reports:

“Monsanto’s fiscal first-quarter results gave investors only part of what they had hoped to see. On the sales front, Monsanto suffered a worse-than-expected 23% decline in revenue, to $2.22 billion, far lower than the $2.39 billion consensus forecast among investors. Extensive expenses related to the company’s restructuring also hit Monsanto’s bottom line, with a net loss of $253 million. The company’s $0.11-per-share adjusted net loss was only about half the red ink that investors had expected to see.”

Bayer has an 18 percent market share in crop chemicals, just behind Syngenta, with a 19 percent share.

Confidential meetings have been held in Chicago in order for Monsanto to express its interest in Bayer’s agricultural assets. The German company has said that it wasn’t interested in selling its crop chemicals business, as it sees it as an “integral part of the German healthcare” group of which Bayer is a part.

But Monsanto seems insistent on consolidating the seed industry – chemicals and seed alike – despite failing GM crops, high inventories, and low return on costly investments in developing new GM traits that are patentable. According to Failure to Yield, despite 20 years of research and 13 years of commercialization, genetic engineering has failed to significantly increase U.S. crop yields.

India has also cracked down on Monsanto’s seed royalties. It wants to impose price and royalty cuts on GM cotton seeds from the US-based biotechnology corporation. Monsanto currently has 90 percent dominance in the Indian market, but officials say it’s welcome to leave if it doesn’t accept the government’s terms. As India’s junior agriculture minister told Reuters:

“It’s now upon Monsanto to decide whether they want to accept this rate or not. If they don’t find it feasible, then they are free to take a call. The greed (of charging) a premium has to end.”

Though Monsanto and Bayer have both declined to comment on the possible merger, Bayer’s crop sciences unit might be the only way Monsanto can save itself from further economic shortfalls. The company’s seed and productivity segments both saw substantial declines from last year’s levels.