Monsanto CEO Hugh Grant at Fortune's Global Forum last year.
Photo by Bloomberg via Getty Images

The seed giant's CEO talked acquisitions on the company's last earnings call.

By Beth Kowitt
May 12, 2016

For months Monsanto MON was the pursuer as it went after Syngenta, the largest player in the agrochemicals business.

Monsanto, the world’s largest seed company, wanted to add to its chemicals business—headlined by Roundup—in part to become a full-service operation for farmers. The offer, rebuffed by Syngenta, was part of a wave of consolidation in the industry as Big Ag suffers through a downturn in the ag cycle. Record harvests had driven down commodity prices, tightening farmers’ wallets.

Now it seems that Monsanto is the pursued. Last night Street Insider reported that BASF was considering a bid for Monsanto, and Bloomberg reported this morning that Bayer is exploring its own separate bid. The Bloomberg story noted that Bayer could still decide against a bid or pursue other transactions such as a joint venture. Neither BASF nor Bayer commented.

Monsanto isn’t talking either but CEO Hugh Grant spent a fair bit of time discussing M&A on the company’s second quarter call in April. The backdrop was the end of Monsanto’s pursuit of Syngenta, as the chemicals giant decided to be acquired by state-owned ChemChina.

When asked on the April call whether he thought there would be another round of large-scale M&A in the industry, Grant said it was a “hard to call.”

In his prepared remarks, Grant said that going forward R&D or commercial partnerships were more likely for Monsanto than large-scale M&A to get to its goal of developing “fully integrated solutions for the farmer of the future.” In the area of crop protection, Grant said it would collaborate through licensing, partnerships, and possible small-scale M&A. He pointed to examples like Nimbus Therapeutics, with whom Monsanto has a joint venture to develop fungicide.

“We still think there is an opportunity in bringing chemistry and biology together on that acre and using data science as the glue that holds that together,” he said. A deal with Syngenta would have “accelerated” that process, he noted, but “it was never contingent or dependent on it.” He said the company would now get to the same destination, but “using a different path.”

We’ll soon find out whether that path could include Bayer or BASF.

Some analysts are not so sure. Credit Suisse’s European pharma team, for example, said an approach by Bayer is “high unlikely” while the firm’s chemicals team said while it could not rule out a bid by BASF it also view it as unlikely. But one thing is clear: Big Ag M&A talks are not yet over.

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