Chemicals and health-care group Bayer AG is poised to announce the acquisition of USA seeds company Monsanto on Wednesday for more than $66 billion, clinching the biggest deal of the year, people familiar with the matter said.
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Monsanto has accepted a takeover offer from Bayer at $128 a share, the BBC and others reported, although the companies have not confirmed it.
Leverkusen, Germany-based Bayer first made an unsolicited offer for Monsanto of $122 a share in May, and then bumped that in July to $125.
Bayer, based in Leverkusen, said the companies’ combined agriculture business would keep its seeds business and North American business headquarters in St. Louis, where Monsanto is now based.
In the past two decades Monsanto has pioneered the commercialisation of genetically modified organisms, or GMOs.
The deal still needs regulatory and shareholder approval.
Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal. The Bayer supervisory board is scheduled to meet this week to discuss the deal and Monsanto’s board will meet next week.
Bayer says it will be taking on $57 billion in debt to finance the purchase, which is the largest-ever foreign acquisition by a German company.
Analysts and investors have said Bayer and Monsanto’s crop businesses are complementary.
“More than 500,000 people around the world have spoken out against this risky deal that has the potential to usher in a new era of sterile crops soaked in unsafe pesticides”. Bayer expects the deal to close by the end of 2017. Shares of Bayer were trading 3% higher on the Börse Frankfurt after the news broke, the report added. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.
Consolidation elsewhere in the chemicals sector has seen Switzerland’s Syngenta snapped up by China’s state-owned ChemChina.
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“Clearly Bayer will realise cost savings from the acquisition, but they have had to pay an enormous price for Monsanto at a 45% premium to the previously undisturbed share price”.
