When I last wrote on Monsanto (NYSE:MON), I thought the company was still in for some rough quarters as corn prices continued to weaken, but that M&A chatter would continue to swirl. And that's exactly what has happened.
Monsanto's financials are wilting in the face of weak corn prices and more aggressive discounting from rivals, but Bayer (OTCPK:BAYRY)
has come forth as a bidder for the company. Bayer hasn't come forward
with an especially strong bid, though, and it remains to be seen whether
Monsanto can coax a more appropriate bid from Bayer, get BASF (OTCQX:BASFY) involved, perhaps have another go at Syngenta (NYSE:SYT), or go it alone and deliver the benefits of its strategic partnership strategy.
On
its own merits, I think Monsanto is at its fair value, as I do believe
the soy business will start delivering in a big way and that the company
has some high-potential pipeline projects reading to deliver in the
coming years. While a bid from Bayer of $130 or higher would obviously
represent upside, there is the risk that Bayer walks away or that the
company pursues an alternative (like a venture with BASF) that may be
worth more in the long term, but will require a great deal more
patience.
Read more here:
Monsanto Facing Some Hard Decisions
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