Bayer’s $62 Billion Offer Not Good Enough, says Monsanto’s Board of Directors

Monsanto’s board of directors has unanimously decided that Bayer’s US$62 billion cash offer to purchase the company is “incomplete and financially inadequate.”

“We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer’s business,” said Hugh Grant, Monsanto Chairman and CEO, in a statement shared on Tuesday. “However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition.”

Monsanto’s board says it remains open to “continued and constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved.”

In response, Bayer CEO Werner Baumann noted Bayer is “pleased that Monsanto’s Board shares our belief in the substantial benefits an integrated strategy could provide to growers and broader society. We are confident that we can address any potential financing or regulatory matters related to the transaction. Bayer remains committed to working together to complete this mutually compelling transaction.”

On Monday, Bayer disclosed some information about its May 10, 2016 offer, including its value of US$122 per share, or US$62 billion in total. The valuation was approximately 37 percent above Monsanto’s closing share price on May 9.

“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” said Baumann.

Bayer said it would expect annual earnings contributions or synergies from joining the two companies worth US$1.5 billion after year three.

Bayer also outlined plans — if the deal were to go ahead — to have its global Seeds & Traits and North American commercial headquarters in Monsanto’s hometown of St. Louis, Missouri, with global Crop Protection and divisional Crop Science headquarters staying in Monheim, Germany. Digital operations would be based near San Francisco, California.

Monsanto’s board says it has not set a timeline for further discussions.

Editor’s note: this report was updated to add Bayer CEO’s response.

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