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Monsanto agrees to $66 billion deal with Bayer
German chemicals giant Bayer said on Wednesday it had signed a $66 billion (58.8 billion euros) takeover deal with USA seeds and pesticides firm Monsanto.
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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.
Bayer is paying $128 (£97) per share for Monsanto, a 44% premium on its price in May before a proposed deal was announced.
The transaction includes a US$2-billion break-up fee that Bayer will pay to Monsanto should it fail to get regulatory clearance. “This combination will deliver just that, an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and our Climate Corporation platform to help growers overcome the obstacles of tomorrow”.
The takeover comes after months of Bayer submitting offers for the St. Louis-based Monsanto, which specializes in agricultural science and seed making.
Bayer initially offered $122 per share, then $125 per share, before the companies agreed to a final per-sale sale price of $128.
Werner Baumann (left), CEO of Bayer AG, and Hugh Grant, Chairman and Chief Executive Officer of Monsanto.
Its equity components of approximately $19 billion are to be raised through issuance of convertible bonds and a rights offer. “Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto”. Nevertheless, following this tie up of Bayer with Monsanto that will create a new leader with combined revenue of $26 billion from agriculture, the number of players will drop to only four.
The deal still needs regulatory approval, and if approved, isn’t expected to close until 2017.
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The purchase is part of “a dramatic wave of consolidation among the companies that sell seeds and pesticides to farmers”, as NPR’s Dan Charles puts it. In the past year DuPont and Dow Chemcial agreed to merge, and China National Chemical Corp inked a deal to buy Syngenta, which for years had been eyed by Monsanto. And if either Bayer or Monsanto think this is a slam-dunk deal, they’re setting themselves up for a rude awakening.