German pharmaceuticals and chemicals giant Bayer is to acquire Monsanto in a $66bn (£50bn) deal that will create the world’s largest seeds and pesticides company.
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German drugs and crop chemicals company Bayer on Wednesday announced that it was acquiring USA seeds firm Monsanto for $66 billion in the largest ever all-cash deal on record. In a joint announcement on Wednesday, the two companies said the $128 a share deal represents a 44 percent premium over Monsanto’s closing stock price on May 9, 2016 (one day before the proposed deal was announced).
After months of negotiating, Bayer is purchasing Monsanto with a sale price totaling $66 billion. “In addition, Bayer has committed to a $2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals”, it said.
That was turned down by Monsanto, which deemed the price inadequate. Wall Street, however, isn’t so sure given the unexpected rejections of some mergers such as the Staples-Office Depot deal.
Their accord comes as Dow, a competitor in the agribusiness sector, is trying to win regulatory approval for its merger with DuPont.
Grant said the tie-up was focused on “innovation”, product research and the combined product line the two companies could offer to farmers.
Monsanto became the largest USA cottonseed company in 2007 with its purchase of Delta & Pine Land Co. for $1.6 billion. “We believe the combination with Bayer represents the most compelling value for our shareholder, with the most certainty through the all-cash consideration”.
The acquisition signals a greater focus by Bayer on its agriculture business, which now produces farming chemicals, crop supplies, herbicides and pesticides. It is the largest deal of the year so far and the biggest takeover ever of a foreign company by a German one.
CHARLES: They certainly will take a very close look at this.
“If the deals go through between Dow/DuPont and Syngenta/ChemChina, a greater percentage of the seed market would shift to fewer hands”, Verdant said in a recent report.
More than 250 members of the organization are in Washington this week to meet with members of Congress and Agriculture Secretary Tom Vilsack, raising concerns that such deals will result in higher costs of seed and fertilizer at a time when farmers are already struggling.
NSW farmer Dan Cooper advises the Australian Consumer and Competition Commission on agricultural policy, and said farmers were waiting for more details of the deal to emerge.
What’s more, “the record of mergers in these industries is poor at best”, Balto said in an email.
In 2015, the companies had combined agricultural revenue of 23 billion euros.
The world’s population is expected to jump by almost 3 billion people, to 9 billion, by 2050.
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Liam Condon, member of the Board of Management of Bayer AG and head of the Crop Science Division, cited that the biggest challenge confronting the agriculture industry today is how to feed an additional three billion people by 2050 in an environmentally sustainable way.
