NEW YORK • German drug and chemicals giant Bayer has made an unsolicited takeover offer for Monsanto, the world's biggest seed company, as high inventories and low commodity prices spur consolidation in the agrichemicals industry.

Monsanto disclosed the approach on Wednesday before Bayer confirmed its move. Neither released proposed deal terms.

With the American company worth US$42 billion (S$58 billion) by market capitalisation, an acquisition would likely be bigger than ChemChina's February deal to buy Swiss agrichemicals firm Syngenta for US$43 billion - a target Monsanto itself pursued last year - and could face US antitrust hurdles.

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

Bayer, which has a market value of US$90 billion, said in a statement that its executives recently met Monsanto executives to privately discuss a negotiated acquisition.

The proposal comes as Chinese state-backed ChemChina's deal for Syngenta faces intensive regulatory review in the United States over concerns about the security of US food supply. The deal is the largest foreign acquisition ever by a Chinese company, as Beijing seeks to secure the country's own food supply.

Any deal between Bayer and Monsanto could raise US antitrust concerns because of the overlap in the seeds business, particularly in soya beans, cotton and canola.

Bayer is ranked No. 2 in crop chemicals, with an 18 per cent market share, according to industry data. The largest, Syngenta, has a 19 per cent share. Monsanto is the leader in seeds, with a 26 per cent market share, followed by DuPont, with 21 per cent.

REUTERS