NEW YORK — A combination of Monsanto and Syngenta would set the stage for more mergers.

Monsanto has approached Syngenta about a takeover that would create a giant in the market for seeds and crop chemicals with more than $30bn in revenue. Getting a deal approved by regulators will not be easy. To address antitrust issues and help its case, Monsanto has planned for a deal to include a sale of parts of the combined business, a person familiar with the matter has said.

The biggest concerns may be tied to what would be an unprecedented market share in soybeans and maize seeds for the combined company.

Syngenta’s operations in those areas would appeal to a range of buyers from Dow Chemical to BASF and Bayer, said Colin Isaac of Atlantic Equities. Syngenta’s "seed businesses would be pretty easy to sell for good multiples", Mr Isaac, a London-based analyst, said.

On Tuesday, Syngenta shares gained the most since 2008 in Zurich trading amid the takeover speculation.

DuPont could also be a buyer of any assets that were divested, said Bill Selesky, an analyst at Argus Research.

There is another possibility: At Dow, activist investor Dan Loeb once pushed for a breakup, and CEO Andrew Liveris has suggested the company is open to divesting its agriculture unit.

Monsanto becoming a much stronger competitor could be a catalyst for the $60bn company to more seriously consider taking the step of exiting that business, which made up about 13% of its revenue last year, James Sheehan of SunTrust Banks said. That segment would be prime pickings for DuPont and its Pioneer seed business, he said.

"That’s the deal I’ve always expected to happen," Mr Isaac of Atlantic Equities said. "It’s attractive for Pioneer and it’s attractive for Dow in terms of focusing their portfolio on the chemicals business and raising a lot of cash."

Bloomberg

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