 "Tomato farm; Image courtesy: Bayer")
Germany life sciences company Bayer has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto Company for $ 122 per share or an aggregate value of $ 62 billion. This offer, based on Bayer’s written proposal to Monsanto dated May 10, 2016, represents a substantial premium of 37 percent over Monsanto’s closing share price of $ 89.03 on May 9, 2016.
The 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. The combination is expected to provide Bayer’s shareholders with accretion to core EPS by a mid-single-digit percentage in the first full year after closing and a double-digit percentage thereafter. Initially, Bayer expects annual earnings contributions from total synergies of approximately $ 1.5 billion after year three plus additional integrated offer benefits in future years.
“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. 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,” said Werner Baumann, CEO of Bayer AG.
This transaction would bring together leading seeds & traits, crop protection, biologics, and digital farming platforms. Specifically, the combined business would benefit from Monsanto’s leadership in seeds & traits and Bayer’s broad crop protection product line across a comprehensive range of indications and crops. The combination would also be truly complementary from a geographic perspective, significantly expanding Bayer’s long-standing presence in the Americas and its position in Europe and Asia/Pacific. Customers of both companies would benefit from the broad product portfolio and the deep R&D pipeline.
Liam Condon, member of the board of management of Bayer AG and head of the crop science division, said, “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.”
Under the proposed transaction, the combined business would provide attractive opportunities for the employees of both companies and have its global seeds & traits and North American commercial headquarters in St. Louis, Missouri, its global crop protection and divisional crop science headquarters in Monheim, Germany, and an important presence in Durham, North Carolina, as well as many other locations throughout the US and around the world. Digital farming for the combined business would be based near San Francisco, California.
