Bayer Raises Offer to $64 Billion for Monsanto

15 Jul 2016 --- Bayer has raised its blockbuster bid for Monsanto from around $62bn to $64bn and said it has addressed Monsanto's questions regarding the deal's financing and regulatory requirements, as it ups the ante in its bid to create the world's biggest seeds and crop company.

The German chemical and drug giant has upped its cash offer for the US agribusiness by $3 a share to $125 a share.

Monsanto, which rejected Bayer's $62bn initial offer in May as too low, said it would not comment until it fully reviewed the revised offer.

The new offer represents around a 40 percent premium on Monsanto's current share price.

Disclosing the new offer publicly yesterday, Bayer said that, following several weeks of private talks with Monsanto, it had "comprehensively addressed Monsanto’s questions concerning financing and regulatory matters and is prepared to make certain commitments to regulators, if required, to complete the proposed acquisition of Monsanto”.

Werner Baumann, chief executive of Bayer, said: "We are convinced that this transaction is the best opportunity available to provide Monsanto shareholders with highly attractive, immediate and certain value. Bayer is fully committed to pursuing this transaction”.

Underscoring its ambition to nail down the deal, Bayer said it had added a $1.5bn break fee to the offer should it be thwarted by regulators.

According to a report in the Wall Street Journal, the two companies had been odds after Monsanto refused to allow Bayer detailed access to its books unless it made a higher offer.

The share price of Monsanto nudged up 3 percent to $104 a share after the new offer was disclosed.

Monsanto chief executive Hugh Grant has previously indicated that Monsanto could pursue other options, such as a joint venture to create value, instead of the Bayer deal.

The proposed deal comes amid a wave of consolidation in the sector.

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 is the second biggest maker of crop chemicals behind the Swiss company Syngenta.

Monsanto, which is cutting its workforce amid falling profits, attempted to by Syngenta last year.

But Syngenta instead accepted a US$43 billion offer from Chinese state company ChemChina.