German pharmaceutical giant Bayer has reached an agreement to buy USA seed and weed killer company Monsanto for $66 billion after months of negotiations, the two businesses announced Wednesday.
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The U.S. seedmaker Monsanto agreed to a $66 billion buyout deal with Germany’s Bayer to create a global agricultural and chemical giant.
Bayer’s offer is $4 billion more than the previous and a 44% premium over Monsanto’s stock price on May 9. Also Bayer has agreed to pay a break up fee of $2 billion if the deal is not approved by regulatory agencies. Bayer CEO Werner Baumann said the merger will bring integrated solutions “faster” to the farmers through a combination of both companies’ “innovation efforts”, compared to working separately.
Monsanto’s genetically modified (GM) seed offerings and Climate Corp data analytics offering to farmers would fit in with Bayer’s crop protection lines, the firms said in the statement announcing the deal.
The new company’s agriculture business will continue to be based in St. Louis, according to The New York Times, while its crop science division will be moved to Germany.
The purchase of Syngenta by ChemChina was the biggest deal announced worldwide this year before Bayer and Monsanto reached agreement.
Bayer plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.
Bayer, which is strongest in Asia and Europe, stands to gain from Monsanto’s expertise in agriculture and seeds. It first offered $122 per share, which was subsequently raised to $125 per share and $127.50. Combined with its debt acquisition in the company, Bayer will be purchasing Monsanto for $66 billion United States dollars.
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Monsanto rejected that bid, but said it was “open” to further talks. This is the world’s largest all-cash deal on record and is expected to close by the end of 2017. “This combination will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world class seeds and trays”. For example, a merger between DuPont and Dow Chemical that was agreed upon in December of past year is unlikely to close until early 2017 after the European Commission started an investigation.
