On Wednesday, Corporate Big Pharma giant Bayer finally concluded its long-time negotiations and has officially announced an agreement to take over USA chemical giant Monsanto for an estimated $66 billion.
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“Bayer and Monsanto would be two of the remaining agribusiness giants to merge, and regulators are likely to scrutinize whether the deal could raise prices that farmers pay for seeds and chemicals”, The New York Times said.
The combined business would locate the global seeds and traits and the North American commercial headquarters in St Louis, Missouri while the main global crop protection and crop science facility would be in Monheim, Germany.
Bayer’s wooing of St. Louis-based Monsanto has played out against a backdrop of a rapidly consolidating crop and seed industry as falling prices weighed on profits.
The U.S. seedmaker Monsanto agreed to a $57 billion buyout offer from Germany’s Bayer in a deal that would create global agricultural and chemical giant. Bayer CEO Werner Baumann said the merger will bring integrated solutions “faster” to the farmers through a combination of both companies’ “innovation efforts”, compared to working separately.
Bayer initially offered $122 per share, then $125 per share, before the companies agreed to a final per-sale sale price of $128.
The boards of both companies have approved the acquisition and closing is expected in 2017. As of 2015, Monsanto’s Deltapine brand had 31 percent of the market while Bayer’s Fibermax and Stoneville brands combined for 39 percent, according to a U.S. Department of Agriculture report published previous year. Monsanto shares were up 1.6% ahead of the U.S. market open.
The antitrust review of the Bayer-Monsanto tie-up will focus in part on competition between biotechnology companies that produce herbicide-resistant seeds, according to Jason Miner, an analyst at Bloomberg Intelligence.
It would trump Daimler’s merger deal with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion.
Macquarie Securities in NY said the merger will create a structure that will help farmers optimize crop yields.
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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.
