Bayer is flirting with Monsanto, proposing an acquisition that could result in the creation of the world’s largest farming, chemicals, and seeds company.
The German pharmaceutical giant has made an unsolicited bid for the St. Louis-based agribusiness company, which would give Bayer a foothold in the life sciences business by bringing aboard Monsanto’s expertise in herbicides, including the popular weedkiller, Roundup.
Word of the potential mega-merger comes amid a flurry of activity around glyphosate, the controversial key ingredient found in Roundup. On May 16, the United Nations’ Food and Agriculture Organization and the World Health Organization issued a joint report (pdf) finding that glyphosate is “unlikely to pose a carcinogenic risk to humans from exposure through the diet.” That comes only a year after the WHO had released a report saying the chemical probably was carcinogenic to humans. Meanwhile, on May 17, The Intercept published a piece about the alleged toxicity of other, “inert” ingredients in Roundup.
A vote by a European Union commission is expected to take place next week to decide whether to keep the widely used herbicide on the market.
That wouldn’t be the only risk to Bayer were it to swallow up Monsanto.
Monsanto has seen a slight drop in year-over-year quarterly profit since 2015.
The company also has experienced shrinking sales growth, connected, in part, to lower soybean and corn prices. Earlier this year, the company announced plans (paywall) to lay off 16% of its global workforce, which amounts to about 3,600 employees.
To be sure, Bayer and Monsanto could pursue other agreements if a full acquisition doesn’t pan out. That could include asset swaps (akin to the $20 billion GlaxoSmithKline-Novartis swap in 2015) or even a joint venture.