Bayer snatches up Monsanto for $66B
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.