However, there is no immediate word on what this means for jobs in St. Louis.
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Earlier this week, Bayer AG (ADR) (OTC: BAYRY) announced an increased offer of $128 per share, fully cash, to Monsanto Company (NYSE: MON).
The proposed combination of Bayer and Monsanto would create a seed and crop-chemical heavyweight with about $26 billion in sales.
But investors’ reaction in the United States, where Monsanto shares rose 0.6 percent but remained more than $21 below the deal price, suggested deep market doubts that the deal can pass financial and antitrust hurdles.
Todays announcement is a testament to everything weve achieved and the value that we have created for our stakeholders at Monsanto.
Monsanto Chief Technology Officer Robert Fraley called the deal “bittersweet”. Enhanced Solutions for GrowersThis transaction brings together two different, but highly complementary businesses. To satisfy antitrust concerns, St. Louis-based Monsanto agreed at the time to sell its Stoneville Pedigree Seed unit, which had 12 percent of USA cottonseed sales, to Bayer for $310 million. They said growers will benefit from a broad set of solutions to meet their needs in seeds and traits, digital agriculture and crop protection.
The US$66 billion tie-up – the biggest deal this year – follows months of mergers that are consolidating agriculture’s top seed and chemical producers into a knot of global powerhouses.
Rival seed developers Syngenta, Dow Chemical Co. and DuPont Co. have all recently struck deals, which could make seeking regulatory approval even more complicated, experts say.
Bayer in the U.S. is known largely for its pharmaceuticals, with scientists who developed modern Aspirin and Alka-Seltzer. It is also the largest potential acquisition of the year.
Bayer claims that $1.5 billion in annual synergies will be realized by year three. The company intends to raise approximately $19 million in equity through issuance of mandatory convertible bonds. “Bridge financing for $57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan”.
The deal is also expected to face extensive regulatory processes in the USA, the European Union and elsewhere. The transaction is expected to close by the end of 2017.
“Just closing the deal is not a sign of success”, said Nils Stieglitz, a professor at the Frankfurt School of Finance and Management. Bayer has agreed to pay Monsanto a $2 billion breakup fee if the deal is not completed.
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Leverkusen-based Bayer said the merged companies’ agriculture business would have its seeds business and North American business headquarters in St. Louis, Missouri, where Monsanto is now based.
