Bayer reveals desire to acquire Monsanto

Business, Finance, Life sciences and energy | Tue 24 May | Author – Business & Finance

In response to market speculation, chemical and pharmaceutical company Bayer has publicly disclosed the contents of its private proposal to acquire Monsanto.

Bayer has made an offer to acquire all of the issued and outstanding shares of common stock of Monsanto for an aggregate value of $62bn.

The acquisition of Monsanto would create a global agriculture leader. The combination is expected to provide Bayer’s shareholders with accretion to core EPS by a mid-single-digit percentage in the first full year after closing and a double-digit percentage thereafter.

Initially, Bayer expects annual earnings contributions from total synergies of approximately $1.5bn after year three plus additional integrated offer benefits in future years.

“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” said Werner Baumann, CEO of Bayer AG. “Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.”

This transaction would bring together Seeds & Traits, Crop Protection, Biologics, and Digital Farming platforms. Specifically, the combined business would benefit from Monsanto’s leadership in Seeds & Traits and Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops.

“Bayer is committed to enabling farmers to sustainably produce enough healthy, safe and affordable food capable of feeding the world’s growing population,” said Liam Condon, member of the board of management of Bayer AG and head of the Crop Science division. “Faced with the complex challenge of operating in a resource-constrained world with increasing climate volatility, there is a clear need for more innovative solutions that advance the next generation of farming. By supporting farmers of all sizes on every continent, the combined business would be positioned as the partner of choice for truly integrated, superior solutions.”

The offer is not subject to a financing condition and Bayer intends to finance the transaction with a combination of debt and equity.