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Bayer's Monsanto bid to create biggest agricultural supplier Bayer's Monsanto bid to create biggest agricultural supplier
(about 1 hour later)
German drugs and chemicals company Bayer has made a $62bn (£43bn) offer for Monsanto, in a deal that would create the world's biggest agricultural supplier. German drugs giant Bayer has made a $62bn (£43bn) offer for Monsanto, in a deal that would create the world's biggest agricultural supplier.
Bayer said the bid was an "extraordinary opportunity to create a global agriculture leader."Bayer said the bid was an "extraordinary opportunity to create a global agriculture leader."
Monsanto is primarily known for genetically modified crops, often leading to vocal activist criticism.Monsanto is primarily known for genetically modified crops, often leading to vocal activist criticism.
Last week, news of the deal angered Bayer investors, with one describing it as "arrogant empire-building".
Bayer's farm business produces seeds as well as compounds to kill weeds, bugs and fungus, but it is better known for its healthcare products such as Asprin and Alka-Seltzer.
Analysts said if the deal went through, almost half of the merged firms' business would be agriculture, a mix likely to displease investors who had bought shares in Bayer for its pharmaceutical offering.
Bayer's shares, which fell 8% when the merger talks were announced last week, fell 3% in early trading.
The offer comes amid a wave of mergers in the industry.The offer comes amid a wave of mergers in the industry.
'Perfect match'
Rivals Dow Chemical, DuPont and Syngenta have all announced tie-ups recently, although they have yet to be cleared by regulators.Rivals Dow Chemical, DuPont and Syngenta have all announced tie-ups recently, although they have yet to be cleared by regulators.
'Arrogant empire-building' The drop in commodity prices has put pressure on firms such as Monsanto, with farmers' cutting orders for supplies.
Bayer said the offer of $122 per share represented a 37% premium on the price of Monsanto shares before rumours about the takeover bid emerged in the media.Bayer said the offer of $122 per share represented a 37% premium on the price of Monsanto shares before rumours about the takeover bid emerged in the media.
"We have long respected Monsanto's business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies' shareholders," Bayer's chief executive Werner Baumann said in a statement. "Monsanto is a perfect match to our agricultural business. We would combine complementary skills with minimal geographic overlap.
Both companies had confirmed last week that they were in talks over the issue. "At the same time, ongoing consolidation activities in the industry make this combination by far the most attractive one," Bayer's chief executive Werner Baumann said in a statement.
When news about the takeover offer broke, Bayer shares took an 8% hit and a number of large Bayer investors voiced their criticism of the prospective deal, with one describing it as "arrogant empire-building". He said he was confident that the Monsanto board would accept the offer, saying "we fully expect a positive answer".
Both companies had confirmed last week that they were in talks over a possible deal.
Industry mergersIndustry mergers
The German company has a market value of about $90bn, making it the second-largest producer of crop chemicals after Syngenta. Bayer has a market value of about $90bn, making it the second-largest producer of crop chemicals after Syngenta.
Monsanto, which has a market capitalisation of $42bn, attempted to buy Swiss rival Syngenta last year.Monsanto, which has a market capitalisation of $42bn, attempted to buy Swiss rival Syngenta last year.
However, Syngenta ended up accepting a $43bn offer from ChemChina in February, although that deal is still being reviewed by regulators in the US.However, Syngenta ended up accepting a $43bn offer from ChemChina in February, although that deal is still being reviewed by regulators in the US.
After the unsuccessful bid, Monsanto announced plans to cut 3,600 jobs by the end of next year in a massive restructuring.
Bayer's acquisition of Monsanto is expected to be bigger in value than the ChemChina-Syngenta deal.Bayer's acquisition of Monsanto is expected to be bigger in value than the ChemChina-Syngenta deal.
The biggest merger in the chemicals industry took place late last year when Dow Chemical teamed up with Du Pont to form a new $130bn company.The biggest merger in the chemicals industry took place late last year when Dow Chemical teamed up with Du Pont to form a new $130bn company.