Bayer puts $62 billion ‘all cash’ offer to Monsanto

Following further market speculation and stakeholder inquiries, German multinational chemical and pharmaceutical company Bayer has publicly disclosed the details of its private proposal to buy US-agribusiness giant Monsanto.

Bayer has made an all-cash offer to acquire all shares of Monsanto for $122 per share, or an aggregate value of $62 billion.

A Bayer-Monsanto deal would create the world’s biggest supplier of seeds and agrichemicals.

It was understood that any possible deal would be worth more $40 billion. However, the $62 billion offer has taken the market by surprise.

According to Bayer spokesperson, its acquisition of Monsanto would be a compelling opportunity to create a global agriculture leader, while reinforcing Bayer as a Life Science company with a deepened position in a long-term growth industry.

Bayer’s May 10- written proposal to Monsanto represents a premium of:

  • 37% over Monsanto’s closing share price of USD 89.03 on May 9, 2016
  • 36% over the three-month volume weighted average share price
  • 33% over the six-month volume weighted average share price

“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” said  CEO of Bayer, Werner Baumann.

“Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.”

The acquisition, if successful, would bring together leading Seeds and Traits, Crop Protection, Biologics, and Digital Farming platforms.

Bayer said the combined business would benefit from Monsanto’s leadership in Seeds and Traits and Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops.

“Bayer is committed to enabling farmers to sustainably produce enough healthy, safe and affordable food capable of feeding the world’s growing population,” said Liam Condon, member of the Board of Management of Bayer and head of its Crop Science Division.

“Faced with the complex challenge of operating in a resource-constrained world with increasing climate volatility, there is a clear need for more innovative solutions that advance the next generation of farming.

By supporting farmers of all sizes on every continent, the combined business would be positioned as the partner of choice for truly integrated, superior solutions,”  said Condon.

Bayer’s Board of Management and Supervisory Board unanimously approved the proposal and say they are fully committed to pursuing the transaction.

Bayer said it is prepared to proceed immediately to due diligence and negotiations.

Bayer Finances Fighting Fit

Last month, Bayer recorded first quarter group sales of €11.8m.

For the quarter ending March 31, Bayer’s earnings before interest, taxes, depreciation and amortisation (excluding some costs) rose 16% to €3.40 billion, while net income grew 13.3% to €1.5m.

Bayer’s Crop Science division produces seeds, pesticides, non-agricultural pest control and plant biotechnology. In addition to conventional agrochemical business, it is involved in the genetic engineering of food.

The Crop Science division outperformed the prior-year first quarter by 1.2% to €3.0m.

In regional terms, its Crop Science business decreased 2.2% in Europe, but grew 3.8% in North America.

Bayer’s seed sales grew almost 12% largely thanks to positive growth in vegetable seed sales.

Its sale of fungicides increased almost 3%. However, insecticide sales were down 12.2%.