Bayer buys Monsanto for $66 bln

The takeover comes after months of Bayer submitting offers for the St. Louis-based Monsanto, which specializes in agricultural science and seed making.

Monsanto, which operates a plant in St. Charles Parish, rejected earlier bids as “financially inadequate”.

Last week a third offer of $127.50 was submitted, which in turn started more negotiations that ended with the agreement on Wednesday of $128. Finally, the deal was signed at $128 a share.

This deal will give a competitive advantage to Bayer as well as Monsanto as most of their rivals are moving towards mergers. However, the company failed to acquire Syngenta and also could not establish a concrete deal with the German chemical company, BASF. CNN stated that this could reflect investors doubts that the deal will go through. To satisfy antitrust concerns, St. Louis-based Monsanto agreed at the time to sell its Stoneville Pedigree Seed unit, which had 12 percent of USA cottonseed sales, to Bayer for $310 million.

Farmers will benefit from the combination of expertise that will emerge, officials from Monsanto and Bayer said, citing the possibilities of a combined research and development team that will be able to “accelerate innovation”. The equity component of about $19 billion will be raised through issuance of convertible bonds and a rights offer.

The transaction values Monsanto at about $56 billion.

Senator Bernie Sanders, who recently ended a run for the Democratic presidential nomination, called the deal “a threat to all Americans”. From this point onwards the main risk is an eventual rejection by regulators.

“This new mega corporation would be the world’s biggest seed maker and pesticide company, defying important antitrust protections and giving it unacceptable control over critical aspects of our food supply – undermining consumer choice and the freedom and stability of farmers worldwide”. The combined company will have a strong presence spread across the US, Europe and Asia.

Bayer’s pesticide-focused agricultural business has few overlaps with Monsanto’s dominant seed franchise, according to the companies’ executives.

He said there were a number of worrying issues: “The farmers will lose out as product ranges are rationalised and attempts are made to increase prices”.

Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal.