The company markets high-value seeds and pest management products for farmers as well as gardens.
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Bayer, which is based in Germany, has signed a deal that includes a fee of $2 billion should the transaction fail to get regulatory clearance as planned.
The deals would leave farmers facing a duopoly in seed (Bayer/Monsanto and Dow) and two big firms in chemicals (Syngenta and Bayer/Monsanto), she said. Farming interest groups have criticized such mergers because it could lead to fewer choices and higher prices. Last week at its headquarters in Leverkusen, Germany, Bayer officials had categorically denied any plans to enter into GM vegetable seeds because public opinion is against it. Mahyco declined to comment on Bayer’s stance on GM vegetable seeds “at this moment”.
The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals.
But Bayer said that it expects synergy savings from the merger will allow it to add 1.5 billion to its underlying profit as measured by EBITDA within three years.
Bayer’s move to combine its crop chemicals business, the world’s second-largest after Syngenta AG, with Monsanto’s industry-leading seeds business, is the latest in a series of major agrochemicals tie-ups.
Bayer first made a US$62 billion offer for Monsanto in May and has increased its bid over months of negotiations.
The all-cash deal is valued at about $US128 a share, making it the weightiest all-cash buyout in history, beating the $US60 billion deal between brewers Anheuser-Busch and InBev in 2008.
“Bayer’s competitors are merging, so not doing this deal would mean having a competitive disadvantage”, said fund manager Markus Manns of Union Investment, one of Bayer’s top 12 investors.
USA antitrust enforcers will look at more than product overlaps, said Moss.
The companies insist growth is the only way to continue to bring innovation and technology to farmers because smaller companies can not make the same commitment to research and development.
United States chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness.
“This merger is not a slam dunk”, said Diana Moss, president of the American Antitrust Institute.
Liam Condon, the head of Bayer’s crop science division, said his company was “pretty confident” the deal would be approved by regulators because both companies have “highly complementary” product lines and geographic offerings.
Monsanto’s sales totalled $US15 billion past year.
A cadre of megabanks, including Bank of America Merrill Lynch, Goldman Sachs and JPMorgan, will provide US$57 billion in short-term bridge financing to help finalise the deal, the companies said.
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But the Bayer-Monsanto tie-up comes in the wake of two other proposed mega-mergers involving U.S. companies DuPont and Dow Chemical, and Swiss company Syngenta and ChemChina.
