Who else is Monsanto (MON) talking to? That was the question that grabbed the attention Wednesday after the St Louis-based group's chairman and CEO Hugh Grant said he had been speaking to "others" about strategic alternatives to Bayer's rejected $66 billion bid.
Drowned out were the more fundamental queries about how the world's biggest seed maker can reverse the acceleration of disappointing quarterly results that left third-quarter earnings per share at $2.17, 10% below analyst forecasts, and sales at $4.19 billion, 6.7% off their expected level.
Speculation of a counter-offer to Bayer pushed Monsanto shares from a pre-market loss to a 3.2% increase at the start of trading, before the shares fell back to change hands at $102, up 91 cents, or just under 1%.
"While there is no formal update on the Bayer proposal, I have been personally in discussions with Bayer's management over the last several weeks, along with others regarding alternative strategic options," said Grant in a statement.
Speaking later on a conference call he avoided any further clarification, stating that the talks were private, leaving investors to guess at the possible alternatives.
BASF (BASFY) , another German bidder, is the obvious candidate for that "others" tag. Rumors that the Ludwigshafen-based chemicals group had run the rule of Monsanto emerged in parallel with the latest Bayer rumors in April and are almost certainly true. BASF has repeatedly declined to confirm them - as it did once more on Wednesday.
What is also true is that BASF neither has the balance sheet nor a convincing strategic narrative to counter Bayer's generous offer of $122 per share, a 37% premium to Monsanto's undisturbed share price.
Jefferies analysts ran the numbers in May and estimated that BASF CEO Kurt Bock could raise perhaps $30 billion of new debt before questions would have to be asked about overextending his company. That would leave it needing to sell a further $30 billion of equity - a move that risks an uprising from shareholders. BASF also has no seeds division, unlike Bayer, so would struggle to match its rival's estimated $1.5 billion of synergies from a deal.
BASF shares traded at €67.46 on Wednesday, up €1.39, or 2%, suggesting that its shareholders saw no offer for Monsanto looming.
As unlikely as a BASF counter offer seems, it is still more likely than any other alternative bidder to Bayer emerging.
DuPont (DD - Get Report) and Dow Chemical (DOW) are in the middle of finalizing their own $130 billion combination and would either way never get a further expansion past competition regulators, so they are out. The same goes for ChemChina, which agreed to buy Switzerland's Syngenta (SYT) for $43 billion in February.