Shares of Monsanto are gaining 3.20% to $112.80 in mid-morning trading after the company rejected a $62 billion, or $122 per share, takeover offer from the German chemical company Bayer (BAYRY) on Tuesday.
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However it did says that it is open to continued and constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved.
Bringing together Bayer and Monsanto would form a company with a diverse portfolio making products such as Aspirin, Alka-Seltzer and crop genetics and a range of agricultural products. “(I) don’t think a Chinese player would be allowed to take Monsanto over so (Bayer) don’t need to stretch the price”, Williams said. In any case, Hecht tells Chemistry World that a Bayer-Monsanto union could be problematic regardless of price.
In a statement, chairman and CEO Hugh Grant said, “We believe in the substantial benefits an integrated strategy could provide growers and broader society”, but added the proposal “significantly undervalues” his company and poses financing and regulatory questions.
Following Monsanto’s rejection, Bayer said it looks forward to engaging in contructive talks with the company but stressed that its $122-per-share cash offer provides “full and certain value” for Monsanto shareholders.
Monday closed Tuesday’s regular trading at $109.30, up $3.30 or 3.11 percent. Given the reaction to the buyout from Bayer’s shareholders, though, Monsanto’s rejection may be a blessing in disguise. There’s also lingering concern over whether the deal will be passed by competition authorities as the combination of both companies could account for more than 30 percent of the global crop-inputs business.
In the Bayer statement late Tuesday, Baumann said the company is “confident that we can address any potential financing or regulatory matters related to the transaction”. It could also heighten the already significant worries around the world that farmers are too dependent on one or two companies to supply their seeds. USA senators said on Monday they will pay Bayer’s proposed deal close scrutiny.
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The German firm said expected synergies from the merger would result in an annual boost to earnings of around US$1.5 billion after three years.
