Monsanto Company Inc. has accepted a $128 dollars-a-share, $66 billion dollar overall takeover offer from German drug and chemical company Bayer AG.
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The deal is among the largest German corporate takeovers of a USA company, and would make Bayer the world’s largest supplier of seeds and farm chemicals, according to a recent note by Argus Research.
The three companies that will emerge if the deals are approved – Dow-DuPont, ChemChina-Syngenta and Bayer-Monsanto, will collectively control close to three quarters of the agricultural chemical seeds market, according to analysis by Bloomberg.
The deal, which is reported to be the largest all-cash transaction on record, marks a major consolidation in global seed business.
If the deal does fail to receive regulatory clearance Bayer, will have to pay Monsanto a $2 billion breakup fee. Bayer also intends to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers.
Hugh Grant, Monsanto’s CEO, told The Los Angeles Times that the deal would reap the maximum benefit for the company’s shareholders. “We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration”.
Bayer’s offer is $4 billion more than the previous and a 44% premium over Monsanto’s stock price on May 9.
Monsanto’s genetic materials are used in 90 percent of the USA soybean crop, according to multiple reports.
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German and USA competition regulators could reject the takeover due to the combined company’s size and control over the global seeds and insecticide sprays market. Representatives from the anti-poverty activist group Global Justice Now called the merger “a disaster for global food system”.
