Bayer AG, the German multinational chemical and pharmaceutical company has acquired the USA based seed firm Monsanto Company for $66b.
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The all-cash agreement will see Bayer acquire the business at $128 per share (£97). That price represents a 44 percent premium to Monsanto’s stock May 9, the day before Bayer’s interest in a deal first surfaced.
Both the European Union and the US Department of Justice will examine the deal closely, in addition to 28 other regulators in various countries.
After negotiating for almost four months, Bayer and Monsanto yesterday announced that “they signed a definitive merger agreement under which Bayer will acquire Monsanto for United States dollars 128 per share in an all-cash transaction”. However, competition authorities are likely to scrutinize the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover plan which they say risks overpaying and neglecting the company’s pharmaceutical business. But having the means to make a purchase this size and have the said purchase notarized by federal regulators are two different things.
Both the companies Monsanto and Bayer have presence in India with the USA firm selling genetically modified (GM) cotton seeds in the country for more than a decade. There is a $2 billion break fee if the deal is not completed. The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers.
According to PTI, Bayer had revised its offer multiple times before it finally clinched the deal. 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.
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In a statement Wednesday, Bayer said it will finance the deal using a combination of debt and equity.
