LEVERKUSEN, GER & ST. LOUIS, MO – Third time is the charm for Bayer and Monsanto, as the companies announced today that they have finally signed their long-awaited definitive agreement to merge. Bayer will acquire Monsanto for $128 USD per share, an offer up $0.50 a share from its last. Combined with its debt acquisition in the company, Bayer will be purchasing Monsanto for $66 billion USD.
"We are pleased to announce the combination of our two great organizations. 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 companies stated in a press release that the per share all-cash transaction is a 44 percent premium to shareholders, based on Monsanto’s closing share price as reported on the day before Bayer’s first written proposal on May 9, 2016. Combined with the debt which Bayer will also acquire through the deal, CNN is calling the agreement the biggest takeover of the year.
“Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto. 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.
Bayer and Monsanto stated that the merger will benefit from Monsanto’s platforms for Seeds & Traits and Climate Corporation, with Bayer’s broad Crop Protection product line contributing to the comprehensive range that the deal will encompass. From the merger, stated the companies, growers “will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seed and traits, digital agriculture, and crop protection.”
As sources throughout the industry and beyond debate the impending merger and its impact, both Bayer and Monsanto asserted that the merger will create significant value with expected synergies from the companies to reach $1.5 billion USD after three years. The companies also intend to invest in innovation by allotting themselves a research and development budget of EUR 2.5 billion.
So what trials are in store now for the merger’s pending finalities? The merger deal, though signed in agreement between the companies, must now pass through international regulations in order for the deal to finalize.
The Wall Street Journal reported that Baumann stated Bayer would voluntarily file for the merger to be reviewed by the Committee on Foreign Investment in the U.S., and that he saw no hangups to come from a national security review. Grant stated, according to Reuters, that the companies will need to file in approximately 30 jurisdictions for the merger to clear.
The deal, should it be approved by regulators, is aimed to close at the end of next year. WSJ stated the companies acknowledged there is overlap between the two entities, which could create later challenges for passing regulations. Bayer agreed to pay Monsanto a $2 billion fee should the deal fall through.
Prior to the announcement that the deal had be signed, Monsanto's stock was flat and trading below the prospective offer price from Bayer. CNN stated that this could reflect investors doubts that the deal will go through.
Monsanto’s Board of Directors, Bayer’s Board of Management, along with Bayer’s Supervisory Board, all approved the agreement. At this time, there is no word on what the merged companies would be named.
Will international regulators approve the deal? Or will Bayer and Monsanto remain separate entities? AndNowUKnow will keep you updated as the story unfolds further.
