Bayer agrees to buy Monsanto for $66 billion

German pharmaceutical and chemical giant Bayer AG today announced it would acquire global seed major Monsanto for USD 66 billion in an all-cash deal.

 

"Bayer and Monsanto today announced that they signed a definitive merger agreement under which Bayer will acquire Monsanto for USD 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 USD 128 per share is 44 percent higher than the closing price of Monsanto's share on May 9, the day before Bayer's first written proposal to Monsanto.

 

"USD 128 per share in an all-cash transaction, represents 44 percent premium to Monsanto shareholders and an aggregate value of USD 66 billion," the statement said.

 

In last about four months, Bayer had revised its bid twice to clinch this deal. The first offer of USD 122 per share was revised to USD 125 per share and then to USD 127.50 per share.

 

Bayer said it intends to finance the transaction with a combination of debt and equity. The equity component of about USD 19 billion is expected to be raised through an issuance of mandatory convertible bonds and a rights issue with subscription rights.

 

Bridge financing for USD 57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan, it added.

 

"Also, Bayer has committed to a USD 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."

 

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

 

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 an interest in pharmaceuticals, animal health and consumer health in the country.