Bayer announces plans to acquire Monsanto

LEVERKUSEN , Germany, May 19 (UPI) -- German chemical and pharmaceutical company Bayer AG confirmed Thursday it's pursuing a takeover of the U.S. agrochemical giant Monsanto.

Bayer's offer was acknowledged Wednesday by Monsanto, which added that its board is reviewing the offer. Any takeover offer would involve at least $42 billion, Monsanto's market capitalization.

The offer comes two weeks after Werner Baumann became CEO of Bayer. The company emerged leaner and less conservative under former CEO Marijn Dekkers, but has a substantial amount of debt after a number of acquisitions, a factor that could cloud the purchase of Monsanto. Bayer's debt level of 17.45 billion Euros ($19.68 billion) in 2015 is over twice its debt level of 7.01 billion Euros ($7.85 billion) in 2011. The union would also require regulatory approval.

Bayer would benefit from Monsanto's strength in North America and its expertise in agriculture. A combined company would be involved in pharmaceuticals, agriculture, pesticides and consumer health products.

The offer follows a number of global deals in the chemical and pharmaceutical industries. Dow Chemical Company and DuPont Company announced a $103 billion merger in 2015, and earlier this year the Chinese state-owned China National Chemical Company purchased the Swiss agrochemical group Syngenta AG for $43 billion.