The German pharmaceutical and chemical giant Bayer says it will buy US seed seller Monsanto for $66 billion in an all-cash deal that will create the world’s largest supplier of seeds and agricultural chemicals.
Advertisement
Monsanto agreed to sell itself to Bayer for $128 per share in cash, yet its shares were hovering around $107 on Wednesday, reflecting the significant regulatory uncertainty surrounding the deal in the minds of investors. The all-cash deal – the largest takeover ever by a German company – will create a firm that has control over more than a quarter of the world’s seeds and pesticides. Bayer has committed to a $2 billion reverse antitrust break fee if the deal falls apart and can not obtain necessary approvals. The bid for Monsanto is valued at $66 billion, including debt.
The details confirm what a source close to the matter told Reuters earlier.
Bayer said Wednesday that it agreed to pay $128 per share in cash for St. Louis-based Monsanto after months of acquisition talks in which the pursuer sweetened its bid on multiple occasions. It expects to raise the equity component of about $19 billion by issuing mandatory convertible bonds and through a rights issue with subscription rights. Monsanto’s were up 0.2 percent at $106.3 in premarket trade.
The deal is among the largest German corporate takeovers of a USA company, and would make Bayer the world’s largest supplier of seeds and farm chemicals, according to a recent note by Argus Research. This past February, the China National Chemical Corporation entered into an agreement to acquire Swiss-based Syngenta AG, which had been pursued for many years by Monsanto.
And chemical giants Dow Chemical and DuPont are also planning to merge with the goal of spinning off their seed and crop chemicals operations into a major agribusiness entity.
Monsanto, known for its controversial genetically-modified products, will keep its seed business – and the USA headquarters of the merged group – at its home city of St Louis. The deal marks a major consolidation in global seed business.
Both the European Union and the US Department of Justice will examine the deal closely, in addition to 28 other regulators in various countries. In the meantime, anti-trust regulators will be scrutinizing the takeover very closely.
Bridge financing for United States dollars 57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan, it added.
Advertisement
BofA Merrill Lynch and Credit Suisse are acting as lead financial advisers to Bayer, with Rothschild as an additional adviser. Bayer’s legal advisors are Sullivan & Cromwell LLP (M&A) and Allen & Overy LLP (Financing).
