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Bayer to secure $63bn in financing Monsanto bid

Jun 03 2016 09:02
Aaron Kirchfeld and Dinesh Nair

London - Bayer has secured about $63bn in financing from five banks for its proposed acquisition of Monsanto, according to people familiar with the matter, a deal that would make it the world’s biggest supplier of farm chemicals and seeds.

The German company has selected Bank of America, Credit Suisse Group, Goldman Sachs Group, HSBC Holdings and JPMorgan Chase to each provide about $12.5bn in short-term loans, said the people, who asked not to be identified because the information is private.

The bridge loan includes an option to be increased should Bayer decide to bump its current offer of $122 a share, the people said. Monsanto has said the bid is too low.

Bayer is later likely to issue a bond of about $20bn to $30bn to refinance part of the bridge loan, one of the people said. Handelsblatt reported earlier on Thursday that Bayer had secured €60bn in loans, which could be increased to €75bn if Bayer decides to raise its offer, citing people familiar with the matter.

A representative for Bayer declined to comment.

Goldman Sachs, which advised Syngenta on its $43bn sale to China National Chemical earlier this year, received permission from the Swiss company to provide financing on the Bayer deal, according to two people familiar with the matter.

Goldman Sachs won’t provide M&A advice on the deal, the people said. Bank of America and Credit Suisse are Bayer’s main advisers, and Rothschild is also working on the deal.

The German company interviewed lenders at its headquarters in Leverkusen last week and was planning to select about half a dozen banks, people familiar with the matter told Bloomberg News on May 27. Banks were offering more than $60bn in loans, the people said at the time.

Providing the terms of the funding may help allay Monsanto’s concerns about financing and pave the way for talks on Bayer’s bid to advance. Monsanto said on May 24 that while the original offer was inadequate, it’s open to further negotiations.

Bayer remains confident about reaching an agreement on the deal, which would be the largest this year and biggest ever by a German company.

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monsanto  |  financial services  |  acquisitions
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