Bayer clinches $66bn Monsanto takeover

Bayer and Monsanto announced on Wednesday that they signed a definitive merger agreement under which Bayer will acquire Monsanto for USD 128 per share in an all-cash transaction, totalling $66 billion (€57.78bn).

Based on Monsanto‘s closing share price on May 9, the day before Bayer‘s first written proposal to Monsanto, the offer represents a premium of 44% to that price.

“We are pleased to announce the combination of our two great organisations. 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.

“Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto. We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration,” said Hugh Grant, chairman and CEO of Monsanto.

The combination brings together both companies’ leading innovation capabilities and R&D technology platforms, with an annual pro-forma R&D budget of approximately €2.5bn.

Over the mid to long-term, the combined business will be able to accelerate innovation and provide customers with enhanced solutions and an optimized product suite based on analytical agronomic insight supported by Digital Farming applications.

“The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional three billion people in the world by 2050 in an environmentally sustainable way,” said Liam Condon, member of the board of management of Bayer AG and head of the Crop Science Division.

Pro forma sales of the combined agricultural business amounted to €23bn in calendar year 2015. The combined company will be well positioned to participate in the agricultural industry with significant long-term growth potential.

Bayer intends to finance the transaction with a combination of debt and equity. The equity component of approximately $19 billion is expected to be raised through an issuance of mandatory convertible.

Bridge financing for $57bn was committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.