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Bayer offers R670bn cash to buy Monsanto

May 23 2016 08:00

Melbourne - Bayer offered to acquire Monsanto in an unsolicited bid worth about $62bn (R670bn) to create the world’s biggest supplier of farm chemicals and genetically modified seeds.

The company offered $122 (R1 908) per share in an all-cash bid, it said in a statement on Monday.

That’s a 20% premium to St Louis-based Monsanto’s last close in the US. Bayer expects total synergies from the deal of about $1.5bn after the third year.

Buying Monsanto gives Bayer a company that’s both the world’s largest seed supplier and a pioneer of crop biotechnology. The kind of genetically modified seeds that Monsanto started to commercialise two decades ago now account for the majority of corn and soybeans grown in the US. Monsanto also sells seeds in foreign markets including Latin American and India.

The offer marks a reversal of roles for Monsanto. The company previously sought to buy Swiss pesticide maker Syngenta, abandoning the $43.7bn bid in August after the other company refused to agree to a deal.

The crop and seed industry is being reshaped by a series of large transactions that may end up leaving just a few global players who can offer a comprehensive range of products and services to farmers.

China National Chemical agreed in February to acquire Syngenta for about $43bn, months after Monsanto abandoned its own bid for Syngenta.

Meanwhile, DuPont and Dow Chemical plan to merge and then carve out a new crop-science unit.

Shares in Bayer slid by 7% at the start of trade last Thursday after the chemicals and pharmaceuticals giant said it was in merger talks with US agricultural firm Monsanto.

Earlier, the German drug manufacturer best known for its aspirin painkiller had said that "Bayer executives recently met executives of Monsanto to privately discuss a negotiated acquisition of Monsanto Company", AFP reported.

bayer  |  monsanto  |  gmo  |  seeds
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