Monsanto's board of directors has rejected a buyout bid by Bayer AG, but appear to have left the door ajar for future negotiations.
St. Louis-based Monsanto announced May 24 that its board of directors considered the $62 billion bid to be "financially inadequate," but went on to say it is open to "continued constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved."News of a proposed and unsolicited takeover bid were confirmed by Monsanto on May 18. Monsanto's value, according to published reports, is thought to be about $42 billion.
An acquisition that includes Monsanto would be a coup for any entity moving forward as companies maneuver for position in the race to meet the food crop needs of a growing world population. Monsanto is the world's largest seed producer and a leader in genetically modified foods and seeds. Bayer AG, whose subsidiaries include Bayer Environmental Science, makes a host of products for the healthcare, agriculture and chemical industries.
According to the U.S. Census Bureau, the world's population is about 7.3 billion. That number is expected to reach 8 billion by 2025, 9.2 billion by 2050 and 11 billion by 2100. An overwhelming percentage of that growth is to occur in developing countries in South America, Africa and Asia.
During that time, says the United Nations, about two dozen countries in Africa will more than double in population, India will overtake China as the world's largest country by population and Nigeria will supplant the United States as the planet's third most populous country.
Given those statistics, maybe Monsanto's board can afford to be picky on behalf of the company's shareholders.
"We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer's business," said Hugh Grant, Monsanto chairman and CEO. "However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition."
The Monsanto group also noted that there is no guarantee moving forward that a deal with Bayer, or anyone else, will be reached, and what such a deal would be worth. Any deal between Bayer and Monsanto would be subject to regulatory approval before becoming final.
It wasn't that long ago that Monsanto, the maker of Roundup, was the aggressor in takeover talks, trying on multiple occasions in 2015, to acquire Syngenta. Swiss-based Syngenta was acquired earlier this year by state-owned ChemChina for $43 billion. That move came on the heels of mega-merger of Dow and DuPont last December.