Monsanto bought by Bayer in one of the biggest mergers
(Reuters/Roumeliotis & Burger) German drug and crop chemical maker Bayer clinched a $66 billion takeover of U.S. seeds company Monsanto on Wednesday, ending months of wrangling with a third sweetened offer that marks the largest all-cash deal on record.
The $128-a-share deal, up from Bayer’s previous offer of $127.50 a share, has emerged as the signature deal in a consolidation race that has roiled the agribusiness sector in recent years, due to shifting weather patterns, intense competition in grain exports and a souring global farm economy.
“Bayer’s competitors are merging, so not doing this deal would mean having a competitive disadvantage,” said fund manager Markus Manns of Union Investment, one of Bayer’s top 12 investors.
But the proposed merger will likely face an intense and lengthy regulatory process in the United States, Canada, Brazil, the European Union and elsewhere. Hugh Grant, Monsanto’s chief executive, said Wednesday the companies will need to file in about 30 jurisdictions for the merger.
Competition authorities are likely to scrutinize the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover that they say risks overpaying and neglecting the company’s pharmaceutical business.
If the deal closes, it will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.
What the newly-formed company would be named is unclear.
The transaction includes a $2-billion break-up fee that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.
“We believe political push-back to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes to dissatisfaction with Monsanto leaving the United States, could provide significant delays and complications,” they wrote in a research note. Bayer’s move to combine its crop chemicals business, the world’s second-largest after Syngenta AG, with Monsanto’s industry-leading seeds business, is the latest in a series of major agrochemicals tie-ups.
The Bayer-Monsanto deal will be the largest ever involving a German buyer, beating Daimler’s tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.