After months of negotiations, Bayer and Monsanto announced today that they signed a definitive merger agreement under which Bayer will acquire Monsanto for $128 per share, or a total of more than $66 billion, in an all-cash transaction.

Monsanto’s board of directors, Bayer’s board of management and Bayer’s supervisory board have unanimously approved the agreement. The offer represents a premium of 44% to Monsanto’s closing share price on May 9, 2016, the day before Bayer’s first written proposal to Monsanto.

“We are pleased to announce the combination of our two great organizations," said Werner Baumann, chief executive officer of Bayer AG. "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, chairman and CEO of Monsanto, said, “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.”

The companies said the transaction brings together two different but highly complementary businesses. The combined business will benefit from Monsanto’s leadership in seeds and traits and the Climate Corp. platform, along with Bayer’s broad crop protection product line across a comprehensive range of indications and crops in all key geographies. As a result, growers will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, digital agriculture and crop protection, the companies said.

The combination also brings together both companies’ leading innovation capabilities and research and development (R&D) technology platforms, with an annual pro-forma R&D budget of approximately 2.5 billion euros. 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. These are expected to result in significant and lasting benefits for farmers — from improved sourcing and increased convenience to higher yields, better environmental protection and sustainability.

“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," Grant said. "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. Together, Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers.”

The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St. Louis, Mo.; its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, and an important presence in Durham, N.C., as well as many other locations throughout the U.S. and around the world. The Digital Farming activities for the combined business will be based in San Francisco, Cal.

“This combination is a great opportunity for employees, who will be at the forefront of innovation in our sector," Baumann said. "This transaction also enhances Bayer’s strong commitment to the U.S., building on our 150-year history with operations across 25 states employing more than 12,000 people in the country. I am convinced that Monsanto will flourish as part of one of the most respected and trusted companies in the world.”

The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals. Closing is expected by the end of 2017. The companies said they will work diligently with regulators to ensure a successful closing. In addition, Bayer has committed to a $2 billion reverse antitrust break fee to reaffirm its confidence that it will obtain the necessary regulatory approvals.