 "Image courtesy: Bayer")
Bayer yesterday agreed to acquire US-based seeds major Monsanto in a deal worth $ 66 billion to create a global leader in crop protection chemicals and seeds business. German chemicals firm will acquire Monsanto for $ 128 per share, a premium of 44 percent to the closing share price on May 9, 2016, in an all-cash transaction.
“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.
This transaction brings together two different, but highly complementary businesses. The combined business will benefit from Monsanto’s leadership in seeds & traits and climate corporation platform along with Bayer’s broad crop protection product line across a comprehensive range of indications and crops in all key geographies. As a result, growers will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, digital agriculture, and crop protection.
“We are pleased to announce the combination of our two great organisations. 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,” said Werner Baumann, CEO of Bayer AG.
The combination also brings together both companies’ leading innovation capabilities and R&D technology platforms, with an annual pro-forma R&D budget of approximately Euro 2.5 billion. Over the mid to long-term, the combined business will be able to accelerate innovation and provide customers with enhanced solutions and an optimised product suite based on analytical agronomic insight supported by digital farming applications. These are expected to result in significant and lasting benefits for farmers: from improved sourcing and increased convenience to higher yield, better environmental protection and sustainability.
“The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional 3 billion people in the world by 2050 in an environmentally sustainable way. It has been both companies’ belief that this challenge requires a new approach that more systematically integrates expertise across seeds, traits and crop protection including biologicals with a deep commitment to innovation and sustainable agriculture practices,” said Liam Condon, member of the board of management of Bayer AG and head of the crop science division.
Pro forma sales of the combined agricultural business amounted to Euro 23 billion in calendar year 2015. The combined company will be well positioned to participate in the agricultural industry with significant long-term growth potential.
Bayer intends to finance the transaction with a combination of debt and equity. The equity component of approximately $ 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.
Bayer expects to close the deal by the end of 2017. In addition, Bayer has committed to a $ 2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals.
