Monsanto Co., the world's largest seed company, turned down Bayer AG's 62 billion acquisition bid as "incomplete and financially inadequate" on Tuesday, but said it was open to engage further in negotiations. Monsanto's decision, first reported earlier on Tuesday by Reuters, puts pressure on Bayer to decide whether to raise its bid, even as the company faces criticism from some shareholders that its 122-per-share cash offer is already too high. The other options are to walk away, or mount a hostile bid. Monsanto shares rose 2.5 percent to 108.70 in afternoon trading in New York, but remained far below Bayer's bid price, underscoring some investor skepticism that a deal can be done. Bayer shares rose 3.23 percent at 87.15 euros in Frankfurt.
Monsanto Co., the world's largest seed company, will reject Bayer AG's 62 billion acquisition bid and seek a higher price, two people familiar with the matter said on Tuesday. Monsanto can see the logic of combining with the German drugs and crop chemicals group, and believes a deal could get the necessary antitrust and other regulatory approvals, the people said, leaving the door open for further negotiations. Bayer will now have to decide whether to raise its bid, even as the company faces criticism from some shareholders that its 122-per-share offer is already too high. The other options are to walk away, or mount a hostile bid. Monsanto shares rose 1.5 percent to 107.61 in late-morning trading in New York, but remain far below Bayer's bid price, underscoring investor skepticism that a deal will be reached.
NEW YORK/FRANKFURT – German drugs and chemicals group Bayer AG made an unsolicited takeover offer for U.S. seeds company Monsanto Co, aiming to create the world's biggest agricultural supplier and integrate pesticides and seeds markets. Monsanto disclosed the approach on Wednesday before Bayer confirmed its move, though neither gave the proposed terms. Sources said Bayer would pay Monsanto shareholders with cash and stock, though the offer price could not be learned. Bernstein Research analyst Jeremy Redenius estimated the price at 41.9 billion ( 47 billion), plus 6.7 billion in assumed debt. He said Bayer might need a 27 billion share issue to help to fund the purchase.
The rejection comes as no surprise. The offer -- which would be the biggest takeover ever attempted by a German company -- comes amid rapid consolidation in the agricultural chemicals industry. And generous as it seems, it falls flat compared to other landmark deals. Last December, Dow Chemical and DuPont agreed to a 130 billion merger, after which the companies are expected to split into three separate businesses, including one focused on seeds and crop sprays, according to the Financial Times. Then, in February, Swiss competitor Syngenta agreed to a 43 billion takeover by the China National Chemical Corp., or ChemChina.
On Tuesday, marriage negotiations between seed/pesticide giant Monsanto and its suitor, German behemoth Bayer, got hotter than a corn field at high noon in late summer. Bayer sweetened its offer to 56.5 billion Tuesday afternoon, just as Monsanto's Board of Directors was scheduled to meet to consider the offer, according to Bloomberg News. The companies could agree to terms as early as Wednesday--but the merger could "still fall apart," the news service reported, adding that "if successful, it would lead to the biggest deal this year and the largest ever by a German company." In its current incarnation, Bayer is mainly a pharmaceutical company, with interests in prescription drugs, over-the-counter staples like aspirin, and animal medicines. But it also has a large division devoted to selling seeds and pesticides--and it has been itching for months to expand those business lines by taking over Monsanto.