Bayer Picks Monsanto for $66 bn 

Berlin/New Delhi: German pharmaceutical and chemical giant Bayer AG on Wednesday announced its decision to acquire global seed major Monsanto for $66 billion in an all-cash deal. Both Bayer and Monsanto have presence in India. The deal marks a major consolidation in global seed business. Recently, Monsanto’s rival Syngenta was acquired by ChemChina.

Bayer and Monsanto have announced that they signed a definitive merger agreement under which Bayer will acquire Monsanto for $128 per share in an all-cash transaction, Bayer said in a statement. The board of the two companies have unanimously approved the agreement, it said.

The offer of $128 per share is 44 per cent higher than the closing price of Monsanto’s share on May 9, the day before Bayer’s first written proposal to Monsanto. $128 per share in all-cash transaction, represents 44 per cent premium to Monsanto shareholders and an aggregate value of $66 billion, the statement said.

In last about four months, Bayer had revised its bid twice to clinch this deal. The first offer of $122 per share was revised to $125 per share and then to $127.50 per share. Bayer said it intends to finance the transaction with a combination of debt and equity.

The equity component of about $19 billion is expected to be raised through an issuance of mandatory convertible bonds and through a rights issue with subscription rights. Bridge financing for $57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan, it added. 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 added.

The acquisition is subject to customary closing conditions and regulatory approvals. The deal is expected to close by the end of 2017. Bayer CEO Werner Baumann said: This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large.

Hugh Grant, Chairman and Chief Executive Officer of Monsanto, said: “We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration.”

Monsanto, which played a key role in increasing cotton output through genetically modified technologies, has three entities in India Monsanto India Ltd (MIL), Monsanto Holdings Pvt Ltd (MHPL) and JV firm Mahyco Monsanto Biotech India Ltd (MMBL) with a staff strength of more than 1,000. Bayer CropScience, a listed Indian entity, posted a turnover of Rs 3,818.60 crore last fiscal. Besides crop science, Bayer also has interest in pharmaceuticals, animal health and consumer health in the country.

Source: PTI