Bayer snatches up Mon­santo for $66B

- @NathanBome­y USA TO­DAY Nathan Bomey

Germany-based health and agri­cul­tural gi­ant Bayer reached a deal to ac­quire seed and pes­ti­cide firm Mon­santo for $66 bil­lion in yet an­other jolt to a global agri­cul­tural sec­tor that has been rocked by slug­gish crop prices.

Bayer said Wed­nes­day that it agreed to pay $128 per share in cash for St. Louis-based Mon­santo af­ter months of ac­qui­si­tion talks in which the pur­suer sweet­ened its bid on mul­ti­ple oc­ca­sions.

Fol­low­ing a flurry of ma­jor deals in the ag sec­tor, such as the tie-up of Dow Chem­i­cal and DuPont, reg­u­la­tory scru­tiny from the Obama ad­min­is­tra­tion and other gov­ern­ments could prove to be an ob­sta­cle for the Bay­erMon­santo accord.

But Bayer agreed to pay a $2 bil­lion breakup fee if the deal col­lapses be­cause of an­titrust pres­sure.

Bayer, which is fi­nanc­ing the deal with a com­bi­na­tion of its cash re­serves and new debt, de­scribed the fee as re­flec­tive of “its con­fi­dence that it will ob­tain the nec­es­sary reg­u­la­tory ap­provals.”

Mon­santo shares rose 0.6% Wed­nes­day to close at $107.76, fall­ing well short of the deal price, pos­si­bly re­flect­ing skep­ti­cism that the deal will be fi­nal­ized.

The com­pa­nies said they ex­pect the deal to close by the end of 2017.

Their accord comes as Dow, a com­peti­tor in the agribusi­ness sec­tor, is try­ing to win reg­u­la­tory ap­proval for its merger with DuPont. It also comes af­ter ChemChina re­cently won ap­proval from a key U.S. over­sight com­mit­tee for its ac­qui­si­tion of Swiss agri­cul­tural gi­ant Syn­genta.

Taken to­gether, the wave of con­sol­i­da­tion marks a di­rect re­sponse to sink­ing crop prices, which have un­der­mined farmer prof­its and dented de­mand for ag sup­pli­ers.

The Agri­cul­ture De­part­ment’s July Prices Re­ceived In­dex fell 10 per­cent­age points, com­pared with a year ear­lier, to 89.9% as prod­ucts such as corn, wheat and oranges suf­fered.


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