Bayer, Monsanto Reach $66 Billion Deal

Bayer and Monsanto announced early Wednesday they have signed a deal that sees Bayer acquire Monsanto for US$66 billion, or US$128 per share.

Monsanto’s Board of Directors, Bayer’s Board of Management and Bayer’s Supervisory Board unanimously approved the all-cash agreement.

“We are pleased to announce the combination of our two great organizations. This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large,” said Werner Baumann, CEO of Bayer AG.

The combined business will have its global Seeds & Traits and North American commercial headquarters in St. Louis, Missouri, with its global Crop Protection and overall Crop Science headquarters in Monheim, Germany. Digital Farming operations will be based in San Francisco, California.

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Monsanto chairman and CEO Hugh Grant said they “believe that this combination with Bayer represents the most compelling value for our shareowners.”

“This is a point that I’ve talked a lot about over the last year: we are entering a new era in agriculture –one in which growers are demanding new solutions and technologies to be more profitable and to be even more sustainable. The vision for this combination was born out of that desire to help farmers grow more with less,” noted Grant in a video statement alongside Baumann.

The deal is subject to multiple approvals, from shareholders and regulators in around 30 jurisdictions. As noted in this discussion about the possible marriage, the two companies control 95 percent of the canola seed trait business in Canada.

“The overlap question, it is so obvious that we don’t even have to comment on it,” joked Baumann in a media conference call. “I have to ask you for your understanding that we don’t want to pre-empt a regulatory discussion.”

“The unique aspect of this deal is that the overlaps are minimal,” noted Grant.

A Bayer document for shareholders said, “We have committed to undertake a certain level of divestitures if required by regulatory authorities.” Expressing its confidence it will receive regulatory approval, Bayer has committed to a US$2 billion reverse antitrust break fee.

As for maintaining the Monsanto name and brand, they say no decision has been made.

“We haven’t discussed that specifically, but we have said in the past as we looked at our previous transaction, that is something we would be flexible on,” Grant told reporters.

Both sides say they expect the deal will close before the end of 2017. Until then, they say business operations will remain independent.

More to come.

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