Bids and deals: argochemical sector
The agrochemical sector, which makes seeds and pesticides, has come alive with mega-deals.
The agrochemical sector, which makes seeds and pesticides, has come alive with mega-deals. Last week, German chemicals giant Bayer, which specialises in herbicides, launched a $62bn bid for US-based Monsanto. This follows a $130bn merger last year between Dow Chemical and DuPont, two American chemical giants, while ChemChina has launched a $43bn bid for Switzerland's Syngenta.
Investors have long seen agrochemical firms as a way to bet on rising populations and greater demand for food. Sector consolidation could boost potential returns further by lowering competition. If Bayer's bid for Monsanto were to go through, the number of globally dominant firms in the niche could shrink from six to just three.
Still, obstacles to this deal are manyfold. Monsanto has rebuffed Bayer's bid, which already looks pricey. Even if Bayer offers a higher price, US regulators could halt a deal: they intervened in 2007 when stopping Monsanto from buying a rival cotton seed producer, on the grounds that the combination would be too big, squeezing US farmers. So investors in Monsanto shouldn't bet on a higher offer.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Take some profits.
-
Should you invest in UK equities?
The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
By Katie Williams Published
-
State pension errors: DWP urged to check for mistakes among divorced people
Former pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
By Ruth Emery Published