Bayer AG has reached an agreement to acquire Monsanto Co. for about $56 billion to create the world’s biggest maker of seeds and pesticides, according to people familiar with the matter.
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The 58.8-billion-euro deal marks the largest-ever takeover by a German firm and creates a new behemoth in the agrochemical industry. Monsanto directors, who are thought to have been reluctant to engage, were finally forced to accept after the bids gradually ratcheted up to $128 a share.
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.
Negotiations over how much Bayer would pay to obtain Monsanto spanned months beginning as early as March of this year.
Bayer will have to “decisively address the point of reputation and challenges of Monsanto in Europe”, Baumann said when the German chemicals giant launched its takeover attempt.
MONTAGNE: Now, this is just the latest deal among the big agricultural companies.
The world’s population is expected to jump by almost 3 billion people, to 9 billion, by 2050.
But U.S. antitrust enforcers will look at more than product overlaps in assessing the proposed merger, said Moss.
But Monsanto’s market leadership in agricultural seeds and chemicals makes it a highly strategic acquisition for Bayer AG, which itself is a dominant crop chemical company. As of 2015, Monsanto’s Deltapine brand had 31 percent of the market while Bayer’s Fibermax and Stoneville brands combined for 39 percent, according to a U.S. Department of Agriculture report published a year ago.
“The overlaps are minimal”, Grant told reporters on a conference call.
Reuters reports that Bernstein Research analysts give the deal a 50/50 chance of being approved by regulators.
“Based on our preliminary analysis, and given the complementarity of the portfolios and geographic focus of both companies, we expect to maintain major sites in the USA, as well as in Germany”, Bayer said. If they do nix the deal, Bayer says it has agreed to pay $2 billion to Monsanto.
The combined business will have its North American headquarters and Global Seeds and Traits division in St. Louis, Missouri.
The companies also wouldn’t discuss possible job cuts.
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In the pharmaceuticals sector, Merck KGaA two years ago bought Sigma-Aldrich Corp. for $17 billion. This is the world’s largest all-cash deal on record and is expected to close by the end of 2017.
