Monsanto & BASF
Tue April 12, 2011
Updated: Monsanto shares up, but no plans for buyout from BASF
Updated 2:05 p.m. April 12, 2011:
Reuters has now updated its story to indicate that a buyout is not in the plans:
Germany's BASF SE (BASFn.DE) has no plans to buy global biotech seed company Monsanto Co (MON.N), sources with knowledge of the situation said on Tuesday.
Rumors that a buyout was imminent sent shares of Monsanto Co (MON.N) up as much as 4 percent while shares of BASF, the world's largest chemical maker, fell 2.8 percent to 62.59 euros.
So, what value would Monsanto bring to BASF in a buyout? Reuters explains:
A tie-up with Monsanto would give BASF a deeper footing in the United States and help it compete with agricultural rivals, including DuPont's (DD.N) Pioneer unit and Dow Chemical's (DOW.N) DowAgroSciences unit.
Also, Reuters gives further insight on what it would take for BASF to make the move:
A banking source familiar with the matter told Reuters that BASF has no current plans to buy Monsanto, though if it were interested, it would need to pay at least 70 billion euros ($101.2 billion).
And, what's the current relationship between the companies?
The two companies are rivals as well as collaborators, most recently announcing an agreement to jointly develop dicamba tolerant cropping systems similar to the highly successful "Roundup Ready" herbicide-tolerant genetically modified crops for which Monsanto is known.
The system is expected to be introduced in the United States and Canada in the middle of the decade, pending regulatory approvals.
The two companies also have established a research and development collaboration to develop other new genetically modified crops for farmers.
Monsanto's stocks went up 1.8 percent today on the New York Stock Exchange while BASF's shares fell 2.8 percent, according to Reuters. The news agency also said that both Monsanto and BASF declined to comment.