Bayer makes takeover offer for agriculture giant Monsanto

German drug and chemicals-maker Bayer has made an unsolicited offer to buy agricultural giant Monsanto in a deal that could create the world's biggest supplier of seeds and pesticides.

It comes amid a wave of consolidation in the industry, with rivals Dow Chemical, DuPont and Syngenta all entering mega-mergers recently.

No financial details were disclosed.

However, any tie-up is likely to be closely scrutinised by regulators over competition concerns.

"There is no assurance that any transaction will be entered into or consummated, or on what terms," Monsanto said in a statement.

It added there would be "no further comment" until the board of directors completed its review of the proposal.

There has been months of speculation that Monsanto, the world's biggest seed company, could become a target for either Bayer or BASF.

Bayer, which has a market value of about $90bn, is the second-largest producer of crop chemicals after Syngenta.

Monsanto, which has a market capitalisation of $42bn, unsuccessfully tried to buy Swiss rival Syngenta three times last year.

Syngenta ended up accepting a $43bn offer from ChemChina in February. However, that deal is still being reviewed by regulators in the US.

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.

Merger worries

Currently agricultural commodities such as corn and soybean are trading at low prices, hurting farmers' incomes and also profits at seed and chemical companies.

Lower sales of seeds, fertilisers and pesticides have led to higher inventories, forcing companies to cut prices and look at ways to become more efficient.

However, a tie-up between Bayer and Monsanto could raise US competition concerns because of the sheer size of the combined company and the control they would have over the seeds and sprays business.

Farmer groups have raised concerns that such mergers could lead to fewer choices and higher prices.