Fitch warns of Bayer downgrade on Monsanto bid

The international credit rating agency Fitch said Wednesday it would likely downgrade German chemicals and pharmaceuticals giant Bayer if it goes ahead with plans to buy US agrochemicals firm Monsanto for $62 billion (55 billion euros).

“Should the transaction go ahead at the conditions offered or with a revised higher offer, Fitch will likely downgrade Bayer’s ... ratings by a minimum of two notches,” Fitch said in a statement. “The acquisition would cause an increase in leverage and business risk for the combined group,” it added. Rival agency Moody’s had already announced on Tuesday that it was putting Bayer’s ratings on “creditwatch negative”, or set for a possible downgrade.

Bayer, a household name thanks to its painkiller Aspirin, said this week that it is offering $122 per share in cash for Monsanto, or $62 billion (55 billion euros) in all. It would be the biggest takeover by a German group of a foreign company and create a new world leader in seeds, pesticides and genetically modified (GM) crops. Monsanto has dismissed the offer as too low, but said it was willing to entertain further talks on a merger.

Bayer, for its part, said it was “confident that we can address any potential financing or regulatory matters related to the transaction” and it remained “committed to working together to complete this mutually compelling transaction.” (AFP)