Monsanto Rejects Bayer’s $62BN Bid But Says Open to Talks
25 May 2016 --- Monsanto has rejected Bayer's opening takeover bid of $62bn as too low but said it is "open to continued and constructive conversations".
Monsanto's rejection was expected by analysts, but the wording of Monsanto's statement could encourage Bayer to come back with a higher bid.
In a statement, Monsanto said: "Monsanto company announced that its Board of Directors unanimously views the Bayer AG proposal as incomplete and financially inadequate, but is open to continued and constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved."
Hugh Grant, Monsanto chairman and chief executive, said: “We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer’s business.”
“However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition.”
Bayer chief executive Werner Baumann, who has said the $122 a share offer "provides full and certain value for Monsanto shareholders", has refused to be drawn on whether it will table a higher bid.
Responding to Monsanto’s rejection of the bid, Baumann said: “We are pleased that Monsanto’s Board shares our belief in the substantial benefits an integrated strategy could provide to growers and broader society.”
“We are confident that we can address any potential financing or regulatory matters related to the transaction. Bayer remains committed to working together to complete this mutually compelling transaction.”
The offer from Bayer comes as the agriculture industry battles years of falling crop prices and amid a wave of consolidation in the sector.
The combination of the two companies would create the world's largest seed and crop company and could prompt further consolidation.
The combination of the two companies would create the world's largest seed and crop company and could prompt further consolidation.
The proposed deal follows weeks of speculation that Monsanto, which has a market capitalization of around US$40 billion, could be an acquisition target for Bayer, which has a market capitalization of around US$90 billion.
Bringing together Bayer and Monsanto would form a company with a diverse portfolio making products such as Aspirin, Alka-Seltzer and crop genetics and a range of agricultural products.
It would mean that Bayer could tie-up its crop science franchise with Monsanto’s biotechnology and seed products, including its chemical spray Roundup.
According to Morgan Stanley, the combined entity would control around 28 percent of the world's pesticides and 36 percent of US corn seeds.
Bringing together Bayer and Monsanto would form a company with a diverse portfolio making products such as Aspirin, Alka-Seltzer and crop genetics and a range of agricultural products.
It would mean that Bayer could tie-up its crop science franchise with Monsanto’s biotechnology and seed products, including its chemical spray Roundup.
According to Morgan Stanley, the combined entity would control around 28 percent of the world's pesticides and 36 percent of US corn seeds.
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