Commodities & Metals

Bayer Rationalizes $62 Billion Offer for Monsanto

Paul Ausick

Published: May 23, 2016 9:05 am

Last Updated: January 13, 2020 7:43 am

German conglomerate Bayer Monday morning released details of its widely presumed offer for Monsanto Co. (NYSE: MON). The maker of everything from aspirin to fertilizer has offered to pay $122 per share in cash for Monsanto in a deal with a total value of $62 billion.

The offer represents a premium of 37% for Monsanto shares based on their closing price on May 9, the day before Bayer’s written proposal was delivered to the U.S. seed and herbicide maker.

In the letter, Bayer said it was “highly confident” that it could secure full financing for the offer and that it has a “highly successful track record” of getting required regulatory approvals for large deals like this.

Consolidation in the seed and pesticide business is forcing Bayer’s hand, just as Monsanto felt it had to do its best to acquire Syngenta. The coming merger of Dow Chemical Co. (NYSE: DOW) and E.I. du Pont de Nemours and Co. (NYSE: DD) and the Syngenta-ChemChina deal create bigger rivals that may gain a competitive advantage due to their scale.

As with those recent proposals, regulatory scrutiny is likely to be intense, even though there is not a significant overlap in the two companies’ businesses. Monsanto’s seed business is the largest in the world, and Bayer’s main agricultural business is in pesticides. But a merger between the two would substantially narrow the choices for farmers’ supply chains.

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