Bayer Reveals $62 Billion Cash Bid For Monsanto
23 May 2016 --- Bayer has revealed that it has made a $62bn cash bid for US agribusiness Monsanto, citing the deal as a "compelling opportunity".
Monsanto revealed last week that it had received an "unsolicited" approach from Bayer about the deal but said there was "no assurance" that a deal would get done.
Now, aspirin and pharmaceutical giant Bayer has revealed details of the offer. It said it had made an offer of $122 per share, valuing Monsanto at $62 billion.
The German company said its offer price was a "substantial premium for Monsanto shareholders", which was 37 percent above the closing share price of $89 on 9 May and 33 per cent above the six-month average.
Werner Baumann, Bayer chief executive, said: "We have long respected Monsanto's business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies.”
“Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate."
Since the proposed deal was announced, shares in Bayer have dropped by over ten percent. 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 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.
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