Germany’s Bayer offers $62 billion for Monsanto.
Bayer of Germany said Monday that it had offered $62 billion in cash to acquire Monsanto in a deal that would combine two of the world’s biggest companies in the businesses of crop seeds and pesticides.
The transaction, if consummated, would create an industry giant whose products include antibiotics, genetically modified crops and pesticides. It would have a combined annual revenue of more than $67 billion.
Regulatory risks?
Bayer said it decided to make details of its proposal public after market speculation and investor inquiries about a potential deal. The companies confirmed last week that Bayer had approached Monsanto about a potential tie-up. Monsanto said then that its board of directors was reviewing the proposal.
While Bayer said it doesn’t see major regulatory risks to its proposed takeover, the offer nevertheless may intensify worldwide scrutiny of the megadeals that would consolidate the crop-chemicals industry.
Regulators are examining the proposed $130 billion merger between Dow Chemical Co. and DuPont Co., while national security officials in the U.S. are weighing China National Chemical Corp.’s bid to acquire Syngenta of Switzerland.
Bayer said it would be willing to pay $122 a share for Monsanto, representing a 37 percent premium to Monsanto’s closing price May 9, the day before Bayer made its proposal.
“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” Werner Baumann, the Bayer chief executive, said in a news release. “Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.”
Germany and St. Louis
The combined company’s seeds business and North American headquarters would be in St. Louis, where Monsanto is based.
The company’s pesticides and crop science business would be based in Monheim, Germany. Bayer said it expected to achieve annual cost savings of about $1.5 billion after three years if the two companies were combined.
Bayer said it intends to finance the transaction with debt and equity and is “confident” in its ability to do so after advanced discussions with its lenders, Bank of America Merrill Lynch and Credit Suisse.
The German company said its supervisory and management boards had unanimously approved the proposal and were “fully committed” to the transaction.
Dow and DuPont
The proposal came after Dow Chemical and DuPont agreed to merge last year and Monsanto made an unsuccessful bid to acquire Syngenta, a Swiss pesticide maker.
Monsanto offered to pay about $47 billion for Syngenta, but the Swiss company repeatedly rejected its approaches, saying the offer was too low and that such a deal would have trouble winning regulatory approval.
Syngenta agreed in February to be acquired by China National Chemical Corp.