Rumors that a buyout was imminent sent shares of Monsanto Co (MON.N) up as much as 4 percent while shares of BASF, the world’s largest chemical maker, fell 2.8 percent to 62.59 euros.
A tie-up with Monsanto would give BASF a deeper footing in the United States and help it compete with agricultural rivals, including DuPont’s DD.N Pioneer unit and Dow Chemical’s DOW.N DowAgroSciences unit.
Yet three sources with knowledge of the situation said BASF currently has no plans to make a bid for Monsanto.
BASF and Monsanto declined to comment.
The sources said that any bid for Monsanto would need to be high, with some speculating any offer would need to be a 100 percent premium to Monsanto’s market cap, which is roughly $37 billion.
Activity in both stocks was high, with more than 5.8 million Monsanto shares trading hands. The stock’s average daily trading volume is roughly 4.8 million.
In the options market, Monsanto options were heavily traded. Options volume was 3.2 times greater than average daily levels, with about 58,000 calls and 11,000 puts traded by 2:04 p.m. EDT, according to options analytics firm Trade Alert.
“Monsanto shares and front-month call options are active on unconfirmed rumors that BASF is interested in the company,” Jon Najarian, co-founder of Chicago-based brokerage firm TradeMonster, told Reuters.
Investors often turn to equity call options, which grant them the right to buy the stock at a fixed price any time up until expiration, to speculate on share price appreciation.
The two companies are rivals as well as collaborators, most recently announcing an agreement to jointly develop dicamba tolerant cropping systems similar to the highly successful “Roundup Ready” herbicide-tolerant genetically modified crops for which Monsanto is known.
The system is expected to be introduced in the United States and Canada in the middle of the decade, pending regulatory approvals.
The two companies also have established a research and development collaboration to develop other new genetically modified crops for farmers.
Monsanto shares were up 3.8 percent at $69.71 on Tuesday afternoon on the New York Stock Exchange, off an earlier high at $69.82.
$1 = 0.6915 euro
Reporting by Ernest Scheyder in New York, Carey Gillam in Kansas City, Doris Frankel in Chicago and Philipp Halstrick in Frankfurt, editing by Matthew Lewis