German drug and crop chemical group Bayer AG on Thursday announced details of a sweetened 64 billion bid for Monsanto Co. as it tries to put the U.S. seed company under pressure to engage further. Analysts and some Monsanto shareholders were quick to opine that Bayer's latest offer, the largest all-cash takeover bid on record, was unlikely to entice Monsanto. Bayer, however, is hoping that the sweetened offer will spur enough Monsanto shareholders to call on the company's management to be more accommodative. Global agrochemicals companies are racing to consolidate, partly in response to a drop in commodity prices that has hit farm incomes. Bayer made its bid for Monsanto public in May, but the two companies have made little progress since in negotiating a deal.
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.
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.
Drug and chemicals giant Bayer AG made an unsolicited takeover offer for agrichemicals behemoth Monsanto Co., both companies said in separate statements, confirming ongoing speculation. Details of the negotiations and the proposed deal were not made public, but a merged entity would be the world's largest seed and agrichemicals company, with a combined market cap of about 130 billion. Monsanto issued a statement Wednesday "in response to recent media reports" to say "it has received an unsolicited, non-binding proposal from Bayer AG for a potential acquisition of Monsanto, subject to due diligence, regulatory approvals and other conditions." The St. Louis, Missouri, company said the proposal was being reviewed by its board of directors and that it will make no further comment until the review is complete. "There is no assurance that any transaction will be entered into or consummated, or on what terms," the short statement added.