Bayer and Monsanto would be two of the remaining agribusiness giants to merge, and regulators are likely to scrutinize whether the deal could raise prices that farmers pay for seeds and chemicals.
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The firm has been courting the U.S. crops and seeds specialist for months, and the German company previously offered $125 per share.
Under the deal, Bayer, which operates the Research Triangle, N.C. -based Bayer CropScience, plans to acquire the Creve Coeur, Mo. -based Monsanto for $128 per-share in an all-cash transaction. Remember that Syngenta fended off a buyout from Monsanto earlier this year, only to succumb to a takeover by China’s state-owned ChemChina.
According to the companies, the transaction will unite two “different, but highly complementary businesses”. Bayer has committed to a $2 billion reverse antitrust break fee if the deal falls apart and can not obtain necessary approvals.
Meanwhile his counterpart, Mr. Grant penned his statement, saying that the deal with Bayers is definitely going to make Monsanto shareholders happy, as they are going to recieve a better than expected return on their shares once the deal is through and completed.
“The combination with Monsanto represents the kind of revolutionary approach to agriculture that will be needed to sustainably feed the world”, Bayer chief executive Werner Baumann told investors in a conference call. That hesitancy is evident in Monsanto’s stock price, which last traded at $107.58, well under Bayer’s offer price. If they do nix the deal, Bayer says it has agreed to pay $2 billion to Monsanto.
Bayer’s share of the US cotton seed market sits at 38.5 percent, while Monsanto is at 31.2 percent, according to data compiled by the Konkurrenz Group.
Bayer’s sweetened offer of $128 a share works out to a 44% premium to Monsanto’s share price on May 9, the day before the German firm made its first written proposal. Several factors will be weighed including what it might mean to relocate Monstanto from US soil to Germany, the home of Bayer. Shares of Monsanto and other agricultural companies “have been in the dumps along with the agricultural markets”, said Christopher Muir, an analyst with S&P Capital IQ.
Bayer and Monsanto both are well known to farmers and home gardeners.
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The combined company’s seeds division and North American headquarters will be based in St. Louis.
