Monsanto, the USA maker of fertilizers and agriculture products, agreed Wednesday to a takeover by Bayer, the German chemical conglomerate, for $56 billion after months of negotiations.
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The deal must still get the nod from Monsanto shareholders and regulators, who in the US have recently rejected a pair of megadeals in the health sector.
Bayer’s share price leapt on news of the deal but fell back as the afternoon wore on, gaining 1.22 percent to 94.44 euros in Frankfurt by 1500 GMT.
Bayer has committed to a $2 billion reverse antitrust break fee.
They expect to close the deal by the end of 2017.
Shareholders have been critical of the plan, saying Bayer will overpay and lose focus from the pharmaceutical business as it moves toward becoming an agribusiness giant. Bayer makes a wide range of crop protection chemicals, while Monsanto is known for its seeds business.
Bayer will acquire Monsanto for $128 per share in cash, according to a statement released by the companies.
In U.S. trading, shares of both companies closed up 0.6 percent, with Bayer at $104.85 and Monsanto at $106.76.
It would trump Daimler’s merger deal with Chrysler in 1998, which valued the USA carmaker at more than $40 billion.
The two companies were in talks to sound out ways to combine their businesses as early as March, which culminated in Bayer coming out with an initial $122 per-share takeover proposal in May. The combined companies will have an annual pro-forma R&D budget of about €2.5 billion.
“If you look at huge challenges that growers are confronted with of having to produce evermore on limited acreage in order to feed ever-growing population, our goal is to bring better solutions faster to growers so they can increase yield and with that contribute feeding a rapidly growing population”, Baumann said.
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“It’s going to take a lot of innovation to ensure that everybody can be fed”, and the combined company will be able to speed up product improvements to help, Liam Condon, head of Bayer Crop Science, told The Associated Press. The Digital Farming activities for the combined business will be based in San Francisco, California, U.S. “This combination is a great opportunity for employees, who will be at the forefront of innovation in our sector”. And how will Europe – famously opposed to GMOs – respond to the world’s biggest GMO seller becoming an European company, instead of an American one?
