On Monday, German conglomerate Bayer said it made an all-cash offer to acquire Agricultural products giant Monsanto for $122 per share or an aggregate value of $62 billion.
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Monsanto Co. Chairman and CEO Hugh Grant also said in a written statement that the initial offer failed to address potential financing and regulatory risks.
Monsanto and Bayer representatives did not immediately respond to requests for comment.
No timeline has been established to continue buyout discussions, the company said.
Monsanto shares rose 1.5 percent to $107.61 in late morning trading in NY, but remain far below Bayer’s bid price, underscoring investor skepticism that a deal will be reached.
The proposed combination would create a giant seed and farm chemical company with a strong presence in the U.S., Europe and Asia.
From an Australian perspective, interest will centre on the product range, which will feature Monsanto’s range of genetically modified (GM) seeds, including Australia’s only GM food crop, canola, and Bayer’s crop protection products, which include popular selective grass weed herbicides such as Sakura. Many of Bayer’s shareholders are focused on the company’s pharmaceutical business, and may view Monsanto’s agrichemical empire with suspicion. The other options are to walk away, or mount a hostile bid. There’s also lingering concern over whether the deal will be passed by competition authorities as the combination of both companies could account for more than 30 percent of the global crop-inputs business. In February, China National Chemical Corp. agreed to buy Syngenta for roughly the same amount.
Earlier this year ChemChina snapped up Switzerland based Syngenta for just under $60 billion, while Dow and Dupont are amalgamating to create a $180 billion business. In the meantime, it said, no guarantee exists that a deal will be reached. The German company said it doesn’t see major regulatory risks.
Despite its status as a seed-maker, Missouri-based Monsanto has been trying to shore up some problems recently. The company has slashed its earnings forecast, clashed with some commodity-trading companies and became locked in disputes with the governments of Argentina and India.
Monsanto management “talk about 2025 the way other companies talk about 2017”, he said.
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That took the loss since news of the Bayer interested leaked on May 9 to more than 15% and 24% for the year to date. “We think a bid for Monsanto will be expensive, [earnings] dilutive and destroy value”. In this case, we may fix spelling and punctuation. A few things we won’t tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING.
