German drugs and crop chemicals company Bayer on Wednesday announced that it was acquiring USA seeds firm Monsanto for $66 billion in the largest ever all-cash deal on record.
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The three companies that will emerge if the deals are approved – Dow-DuPont, ChemChina-Syngenta and Bayer-Monsanto, will collectively control close to three quarters of the agricultural chemical seeds market, according to analysis by Bloomberg.
Monsanto is a publicly traded multinational agrochemical and agricultural biotechnology company that provides agricultural products to farmers all around the world.
The all-cash agreement will see Bayer acquire the business at $128 per share (£97). It first offered $122 per share, which was subsequently raised to $125 per share and $127.50. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.
To assuage Monsanto’s concerns, Bayer threw in a $2 billion breakup fee if the deal fell apart on antitrust grounds. It will raise the equity component of about $19 billion through mandatory convertible bonds and a rights issue.
Bayer paid a 44 percent premium to Monsanto shareholders.
It comes as the agribusiness sector has been facing pressure for consolidation amid intense competition in grain exports and a souring global farm economy.
The merger will go through an intense and lengthy regulatory approval and processes across several countries, including the United States, the European Union, Brazil and Canada.
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The deal is among the largest German corporate takeovers of a US company, and would make Bayer the world’s largest supplier of seeds and farm chemicals, according to a recent note by Argus Research.
