German chemicals giant Bayer said on Wednesday it had signed a $66 billion (58.8 billion euros) takeover deal with U.S. seeds and pesticides firm Monsanto.
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The deal is expected to be completed by the end of 2017, Bayer said, though it still requires shareholder and regulatory approval.
The new company’s agriculture business will continue to be based in St. Louis, according to The New York Times, while its crop science division will be moved to Germany.
It plans to keep “an important presence” in Durham, N.C., as well as at other US locations, according to the release.
“In addition, Bayer has committed to a Dollars 2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals”, it added. Final negotiations raised the price by 50 cents a share, resulting in the $66 billion price-tag.
Bayer will pay Monsanto $128 per share, the company announced through a prepared statement on Wednesday.
Last week Bayer returned with a third offer of $127.50.
Monsanto and Bayer have had “initial contacts with regulatory agencies describing what this combination would be about”, Bayer Chief Executive Officer Werner Baumann said on an investor call, and “received encouraging feedback”.
The Bayer-Monsanto deal is not the only consolidation taking place as of late.
“I think you all know we have not developed any new herbicide chemistry in several years”, said Grant, referring to the absence of new herbicide registrations on the world market.
That was also the idea behind Monsanto’s swoop on Syngenta past year, which the Swiss company fended off, only to agree later to a takeover by China’s state-owned Chem-China. Bayer’s shares in Frankfurt also rose 0.6 percent. With the current monopoly enjoyed by Monsanto over seeds of this type, this could be the one silver lining of this massive corporate merge.
It comes amid record harvests driving crop prices to painfully low levels for many farmers.
But ultimately, joining Bayer has the same logic to it that Monsanto’s unsuccessful bid for Syngenta previous year did.
In a joint announcement on Wednesday, the two companies said the $128 a share deal represents a 44 percent premium over Monsanto’s closing stock price on May 9, 2016 (one day before the proposed deal was announced).
In some cases already, Bayer and Monsanto are selling competing products, competing cottonseed, for instance, competing weed killers.
The Wall Street Journal reported that Baumann stated Bayer would voluntarily file for the merger to be reviewed by the Committee on Foreign Investment in the US, and that he saw no hangups to come from a national security review.
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