09/15/2016The German-based Bayer has won over US seeds firm Monsanto with an improved takeover offer of around $66 billion, ending months of wrangling after increasing its bid for a third time. The pharmaceutical titan made two previous offers to Monsanto, with the latter’s Board of Directors demanding increases each time. The offer is 44 per cent higher than the closing price of Monsanto’s share on May 9, the day before Bayer’s first written proposal to Monsanto. The combination also brings together both companies’ R&D technology platforms, with an annual pro-forma R&D budget of approximately Euro 2.5 billion.
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In the largest all-cash deal ever, the tie-up will form the world’s largest seeds and pesticides company – controlling more than 25 percent of the global supply of seeds and pesticides, BBC News reports. “This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large”, said Werner Baumann, CEO of Bayer AG (pictured left, with Hugh Grant, Chairman and Chief Executive Officer of Monsanto).
“The whole agricultural industry around the world is basically going thru a transformation”. Including the assumption of debt, the transaction is valued at $66 billion. In addition, Bayer has committed to a United States dollars 2 billion reverse antitrust break fee.
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Both the European Union and the US Department of Justice will examine the deal closely, in addition to 28 other regulators in various countries. Meanwhile, the Digital Farming activities for the combined business will be based in San Francisco, California. 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.
