Falling crop prices have seen farmers cutting back on buying seeds and agricultural chemicals, such as herbicides and pesticides, leading to lower profits for suppliers.
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FRANKFURT, Germany (AP) – After months of courtship, German drug and farm chemical maker Bayer AG has finally reached an agreement to buy USA seed and weedkiller company Monsanto, in a deal that is valued at $66 billion and which will keep the merged entity’s seed business in Monsanto’s home base of St. Louis.
German drug and farm chemical company Bayer AG says it has signed a deal to acquire seed and weed-killer company Monsanto for $66 billion in cash.
Monsanto shareholders still have to approve the deal, as do regulators – with Bayer staking a $2 billion reverse antitrust break fee in case the merger is rejected by USA or European authorities. 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. The combined business is expected to benefit from Monsanto’s leadership in seeds and traits and Climate Corp. platform along with Bayer’s broad crop protection product line.
“USD 128 per share in all-cash transaction, represents 44 per cent premium to Monsanto shareholders and an aggregate value of Dollars 66 billion”, the statement said. Bayer has agreed to pay Monsanto a $2 billion breakup fee if the transaction fails to go through.
For Bayer, Monsanto won’t mark the first time it has opened its pocketbook in the U.S. Two years ago Bayer spent more than $14 billion on the consumer care business of Merck & Co.
On Wednesday, Corporate Big Pharma giant Bayer finally concluded its long-time negotiations and has officially announced an agreement to take over US chemical giant Monsanto for an estimated $66 billion. Some environmentalists claim the growth in the use of genetically modified seeds (which Monsanto is heavily involved in) is potentially unsafe for humans and the environment.
Bayer plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.
Monsanto rejected that bid, but said it was “open” to further talks. The combined Bayer-Monsanto, the combined Dupont-Dow and the China Chem-Syngenta. It first offered $122 per share, which was subsequently raised to $125 per share and $127.50. Closing is expected by the end of 2017.
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Bayer has around 700 employees working in its Seed and Traits business located in Research Triangle Park and a total of about 1,000 employees in the Triangle, according to published reports. Monsanto shares were up 1.6% ahead of the U.S. market open. In May, The Herald-Sun reported that if a deal were approved between the two biotech giants that Bayer’s crop science operations would be moved from Durham to St. Louis.
