Including debt, the deal is valued at around $66 billion. McCracken mentioned the company trying a year ago to do a deal with Syngenta (SYT).
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That was turned down by Monsanto, which deemed the price inadequate. That price represents a 44 percent premium to Monsanto’s stock May 9, the day before Bayer’s interest in a deal first surfaced. The deal “creates great synergies with seeds and traits and data sciences”. Fitch Ratings noted the combined Bayer would have a 25 per cent share in some markets, “almost certainly drawing regulatory scrutiny and posing antitrust obstacles”.
“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.
Hugh Grant, Monsanto’s chief executive, told reporters on Wednesday the companies will need to file in about 30 jurisdictions for the merger.
More than 250 members of the organization are in Washington this week to meet with members of Congress and Agriculture Secretary Tom Vilsack, raising concerns that such deals will result in higher costs of seed and fertilizer at a time when farmers are already struggling.
Bayer makes a wide range of weed killers and pesticides in addition to pharmaceuticals. Bayer sells chemical and biologic crop protection products and the Bayer Advanced garden chemicals line. “Because they have better choices to increase yields in a sustainable way”. With the current monopoly enjoyed by Monsanto over seeds of this type, this could be the one silver lining of this massive corporate merge. Monsanto-Bayer would have 28 percent.
“We haven’t discussed that (rebranding), but we have said in the past when we looked at previous transactions that that was something we would be flexible on”, Grant said in a call with reporters. “The transaction is a compelling opportunity for shareholders of both companies”.
The offer, a record cash takeover, values Monsanto shares at $128 and will create a company worth $66bn (£50bn).
The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St Louis, Missouri, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, as well as other locations throughout the USA and around the world. The future of St. Louis in the larger organization was an important piece of the two companies’ discussions, he said.
Bayer said it’s too early to say whether job cuts will occur. Monsanto plans a shareholder vote on the deal in a few months.
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Bayer initially offered $122 per share, only to be rebuffed by Monsanto management, and then $125 per share before reaching the deal announced Wednesday.
