Bayer in “Advanced” Talks to Buy Monsanto and Willing to Increase Offer to More Than $65bn

06 Sep 2016 --- Bayer said it's in "advanced" talks to buy Monsanto and is willing to increase its offer to more than $65bn as it looks to seal a deal which would create the world's biggest agrochemical company. The German crops and pharmaceutical company said it would now be prepared to offer $127.50 a share, up from the $125 a share offer rejected by Monsanto in July, although it said there was "no assurance that the parties will enter into agreement".

Bayer said that "key terms and conditions have not yet been agreed" but by sweetening its offer for the second time it clearly believes a deal for the US maker of genetically modified crops is in sight.

Monsanto responded by saying it has been involved in "constructive negotiations" with Bayer and said it is "evaluating" the new offer along with "proposals from other parties and other strategic alternatives".

The latest offer from Bayer marks its third offer for Monsanto, which began at $122 per share, though some analysts believe it will need to increase it to at least $130 a share to clinch the deal.

Monsanto chief executive Hugh Grant is thought to want an offer of between $131 and $135 a share, which is likely to be too high for Bayer.

A report earlier this week in the German title Rheinische Post suggested that Bayer would need to pay $130 a share to strike a "friendly" takeover and not mount a hostile takeover.

The board of Bayer are set to meet on September 14 to discuss their next move ahead of an investor conference on September 20 when they will be expected to update the market on a fresh update of the deal.

The likelihood of a deal going through could well be determined by Monsanto’s fourth-quarter results, due to be published on October 5.

Should the results indicate poor trading, then there could be a clamour from investors to push through a deal but if the results are positive, then Monsanto executives might be convinced to pursue life as a standalone company.

Should the deal go through, it would create the world's biggest agrochemicals company and mark the latest deal in the chemicals sector.

ChemChina is buying Syngenta, which Monsanto tried to buy 12 months ago, while Dow Chemical is to merge with DuPont.

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. 

Bayer said: “Bayer confirms advanced negotiations with Monsanto concerning a proposed transaction. While key terms and conditions have not yet been agreed, Bayer would be prepared to provide a transaction consideration of USD 127.50 per Monsanto share only in connection with a negotiated transaction. There can be no assurance that the parties will enter into an agreement.”

Monsanto said: “Monsanto confirmed it has been engaged in constructive negotiations with Bayer AG, during which it has received an updated non-binding proposal for a potential acquisition of Monsanto for $127.50 per share in cash.”

“Monsanto is continuing these conversations as it evaluates this proposal, as well as proposals from other parties and other strategic alternatives to enable its Board of Directors to determine if a transaction in the best interests of its shareowners can be realized. Monsanto will have no further comment at this time. There is no assurance that any transaction will be entered into or consummated, or on what terms."