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Bayer and Monsanto agree $66bn deal

Monsanto has accepted a $66m (£50bn) takeover bid from Bayer


Alex   Black

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Alex   Black
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Bayer and Monsanto agree $66bn deal

Bayer and Monsanto have agreed a takeover deal worth $128 (£97) per share.

 

In May, Monsanto turned down a $62 billion (£42bn) cash offer and last week, on September 7, Bayer announced it had raised its offer for Monsanto to $65 billion (£48.5 billion).

 

 

The takeover could attract close scrutiny from the anti-competition regulators due to the size of the companies. The deal includes a fee of $2bn should the transaction fail to get regulatory clearance.

 

Monsanto is currently the world’s largest seed maker and the takeover will create the world’s largest seed and farm chemical company, controlling nearly 30 per cent of the global pesticides market and has created concerns that a reduction in farmer’s choice and buying power would lead to higher prices.

 

Step forward

 

Werner Baumann, chief executive of Bayer, said: "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."

 

Hugh Grant, chief executive at Monsanto, said: "We are entering a new era in agriculture - one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less.

 

"This combination with Bayer will deliver just that - an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow."

 


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'Horror story'

Professor John Colley, Warwick Business School, said it could be ‘a horror story’ for farmers.

 

"Apart from Monsanto's shareholders, who have hit the jackpot, this looks like a lose-lose bid. Bayer have been forced into paying too much and face major integration and competition authority risks," he said.

 

"Bayer may have won the bid now, but could regret the move at their leisure.

 

"The farmers will lose out as product ranges are rationalised and attempts are made to increase prices."

 

Professor Colley said Bayer's hand had been forced by other deals in the sector.

 

"The industry is responding to adversity with a series of mergers which are expected to have three main benefits: cost reduction, less competition, and growth.

 

"Bayer was clearly concerned at being left behind and was running out of options for merger targets precipitating the move for Monsanto."

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