The German pharmaceutical and chemical giant Bayer says it will buy USA seed seller Monsanto for $66 billion in an all-cash deal that will create the world’s largest supplier of seeds and agricultural chemicals.
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The drama appears to have ended Wednesday, after German biotech giant Bayer won over Monsanto’s management with an offer of $128 a share in cash.
Monsanto shareholders still have to approve the deal, as do regulators – with Bayer staking a $2 billion reverse antitrust break fee in case the merger is rejected by United States or European authorities. But should the deal fail to win regulatory approval, Bayer has agreed to pay a $2 billion fee.
Bayer said the transaction would merge two different but complimentary companies, according to the AP. Bayer makes a wide range of crop protection chemicals, while Monsanto is known for its seeds business. The companies also intend to invest in innovation by allotting themselves a research and development budget of Euro 2.5 billion. 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.
Three weeks after his arrival at the head of Bayer, Werner Baumann was the surprise by announcing in May will redeem the king of genetically modified organisms.
The combined company’s seeds division and North American headquarters will be based in St. Louis. Dow Chemical and DuPont are planning a merger and ChemChina is purchasing Syngenta after the Swiss firm declined a takeover by Monsanto previous year.
It plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.
The transaction has been approved by the boards of both companies and is expected to be completed by the end of 2017, but still must receive approval from regulatory agencies. The first offer of USD 122 per share was revised to USD 125 per share and then to USD 127.50 per share.
“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less”, said Monsanto CEO Hugh Grant in a release.
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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.
