Monsanto may be Bayer takeover target
By Brett Chase
Bloomberg News
LEVERKUSEN, GERMANY - Bayer AG, Germany's second-largest chemical maker, said it is in negotiations to buy a "life sciences" company and some investors say the target could be Monsanto Co.
A Bayer spokeswoman said Wednesday the company is in negotiations, but she declined to elaborate. Bayer's chief executive, Manfred Schneider, said last week his company was interested in acquisitions in both agricultural chemicals and pharmaceuticals. St. Louis-based Monsanto, which makes the top-selling arthritis medication Celebrex through its G.D. Searle drug unit, is in both businesses.
Monsanto's stock price has risen 20 percent since Nov. 2 on speculation that the company would sell itself or split into two parts to sell Searle.
"I would not doubt at all that this is Monsanto," said Nick Redfield, an analyst with Banc One Investment Advisors Corp., which holds 3.6 million shares of Monsanto. "This may be an ongoing discussion. You have to assume various talks have been going on for two years with Monsanto."
The German company doesn't move quickly on such decisions, Redfield said, adding he believes Bayer discussed the acquisition of a plastic-ingredient unit from Lyondell Chemical Co. for 1 1/2 years before the $2.45 billion transaction was announced Tuesday. Given the deliberate pace to which Bayer operates, a merger may not be in the near future, he said.
Schneider, announcing the plan to buy the Lyondell unit Tuesday, said Bayer is not likely to sell itself, but is interested in doing acquisitions. "We are considering everything," he said.
Separately, Bayer spokeswoman Christina Sehnert said Wednesday: "We are in negotiations for a life sciences company."
The suggestion of a Bayer negotiation was reported Wednesday in the Wall Street Journal, which quoted Walter Wenninger, executive committee member responsible for pharmaceutical operations, as saying Bayer "currently is in serious negotiations about a possible life-science deal."
Bayer is slightly larger than Monsanto, based on stock market value. Bayer has a market value of $30.75 billion, compared with Monsanto's $29.07 billion. It's unclear whether a merger would be structured as a merger of equals, however. Bayer has said it does not want to be a minority partner in any merger or joint venture. Monsanto walked away from a planned merger of equals with American Home Products Corp. last year.
Some investors have also mentioned Germany's BASF AG, Europe's largest chemical company, and Switzerland's Novartis AG, the largest maker of crop protection products, as other possible suitors.
It's unclear whether either one of these companies would be likely buyers. Novartis has hinted that it might shed its agricultural business to focus on its drug business. A BASF spokesman, who declined to comment on Monsanto, said "everybody is talking to everybody in this industry."
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