Bayer makes preliminary offer to buy Monsanto

By Greg Roumeliotis and Mike Stone

(Reuters) - Monsanto Co (MON.N), the world's biggest seed company, said on Wednesday it had received an unsolicited proposal to be acquired by German drug and chemicals maker Bayer AG (BAYGn.DE), as high inventories and low prices for agricultural commodities spur a drive to consolidate the sector.

Monsanto currently has a market capitalisation of $42 billion (29 billion pounds). It didn't disclose terms of the approach, but an acquisition would likely be bigger in value than a deal struck by ChemChina in February to buy Swiss agrochemicals and seeds company Syngenta AG (SYNN.S) for $43 billion - a target Monsanto itself pursued last year.

Monsanto's board is reviewing the proposal, which is subject to due diligence, regulatory approvals and other conditions, the company said in a statement. There is no assurance that any transaction will take place, it said.

ChemChina's deal for Syngenta is currently the subject of intensive regulatory review in the United States. Any deal between Bayer and Monsanto could raise U.S. antitrust concerns because of the overlap in the seeds business, particularly in soybeans, cotton and canola, antitrust experts have said.

Germany-based Bayer, which has a market value of $90 billion, did not immediately respond to a request for comment.

In a sign of how sudden Bayer's move was for Monsanto, the latter's President and Chief Operating Officer, Brett Begemann, dismissed speculation of the company being a takeover target for Bayer or German rival BASF SE (BASFn.DE) at an investor conference in New York earlier on Wednesday.

"It's all wild speculation because there's nothing there," he said.

Both Bayer and BASF had been exploring tie-ups with Monsanto for several months, but valuation concerns have made a deal elusive, people familiar had previously told Reuters.

Bayer is ranked No. 2 in crop chemicals, with an 18 percent market share, according to industry data. The largest, Syngenta, has a 19 percent share.

Monsanto is the leader in seeds, with a 26 percent market share, followed by DuPont (DD.N), with 21 percent. DuPont agreed last year to merge with Dow Chemical (DOW.N).

(Reporting by Greg Roumeliotis and Mike Stone in NEW YORK; Editing by Ed Davies and Kenneth Maxwell)