Bayer buying Monsanto for $66 billion

On Wednesday, Corporate Big Pharma giant Bayer finally concluded its long-time negotiations and has officially announced an agreement to take over US chemical giant Monsanto for an estimated $66 billion.

Negotiations on the buyout have taken several months, according to the Associated Press, but after a third offer of $128 a share, up from $127.50, Monsanto agreed to the deal worth $66 billion.

“USD 128 per share in all-cash transaction, represents 44 per cent premium to Monsanto shareholders and an aggregate value of United States dollars 66 billion”, the statement said. Bayer is paying Monsanto $128 per share in an all-cash transaction.

Monsanto CEO Hugh Grant and Bayer CEO Werner Baumann appeared on BloombergTV’s “Bloomberg Markets” on Tuesday morning to discuss the newly announced combination.

That was also the idea behind Monsanto’s swoop on Syngenta a year ago, which the Swiss company fended off, only to agree later to a takeover by China’s state-owned ChemChina. If they do nix the deal, Bayer says it has agreed to pay $2 billion to Monsanto.

Bayer has said combining the companies would generate synergies of $1.5 billion over three years.

“We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration”, Grant said. Bayer also intends to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers. Nevertheless, following this tie up of Bayer with Monsanto that will create a new leader with combined revenue of $26 billion from agriculture, the number of players will drop to only four. To satisfy antitrust concerns, St. Louis-based Monsanto agreed at the time to sell its Stoneville Pedigree Seed unit, which had 12 percent of US cottonseed sales, to Bayer for $310 million.

Bayer first made a play for Monsanto back in mid-May, an offer that was quickly rebuffed by Monsanto.

Together, Bayer and Monsanto will represent a global giant weighing 23 billion annual turnover of euros and involving close to 140,000 employees.

“Bayer and Monsanto would be two of the remaining agribusiness giants to merge, and regulators are likely to scrutinize whether the deal could raise prices that farmers pay for seeds and chemicals”, The New York Times said.