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Bayer discloses Monsanto takeover offer

In response to further market speculation and stakeholder inquiries, Bayer disclosed May 23 that it has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto for $122 per share, or an aggregate value of $62 billion.

The company said acquiring Monsanto would be a compelling opportunity to create a global agriculture leader. If realized, a deal between the two companies would create the largest agricultural supplier.

“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, chief executive officer 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.”

Under the proposed transaction, the combined business would provide attractive opportunities for the employees of both companies, with its global Seeds & Traits and North American commercial headquarters in St. Louis, Miss.; its global Crop Protection and divisional 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. Digital Farming for the combined business would be based near San Francisco, Cal.

Bayer said the combination would provide its shareholders with accretion to core earnings per share 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 $1.5 billion after year three, plus additional integrated offer benefits in future years.

Company shareholders and analysts have expressed concern about Bayer’s ability to finance the deal, but Bayer addressed the skepticism by saying it is highly confident in its ability and intends to finance the transaction with a combination of debt and equity. The expected equity portion represents approximately 25% of the transaction’s enterprise value and is expected to be raised primarily via a rights offering.

Bayer said its board of management and supervisory board unanimously approved the proposal and are fully committed to pursuing the transaction.

“Bayer is prepared to proceed immediately to due diligence and negotiations and to quickly agree to a transaction,” the company said. “Bayer has a successful track record of working with global authorities to secure the necessary regulatory approvals and has extensive experience integrating acquisitions from a business, geographic and cultural perspective.”

USDA joining panel reviewing ChemChina's acquisition of Syngenta

The U.S. Department of Agriculture will join the U.S. Treasury Department’s panel reviewing China National Chemical Corp.’s (ChemChina) proposed acquisition of Syngenta, according to Reuters. ChemChina also extended the deadline to July 18 for Syngenta shareholders to accept a $43 billion takeover offer. The offer was previously scheduled to expire on May 23.

ChemChina said that extensions to the tender offers are expected to occur until all conditions to the offers are satisfied, including obtaining all applicable regulatory approvals. “All of the other terms and conditions of the tender offers remain unchanged, and ChemChina continues to expect to conclude the transaction by the end of the year,” the company added.

Sen. Debbie Stabenow (D., Mich.), ranking member of the Senate Agriculture Committee, applauded the news. In April, Stabenow led a letter to Treasury Secretary Jack Lew, alongside U.S. Sens. Chuck Grassley (R., Iowa), Sherrod Brown (D., Ohio) and Joni Ernst (R., Iowa) – members of the Senate Agriculture Committee – calling on the treasury department to review the deal for any potential effects on U.S. national security and the American food system, with a specific focus on food security and the safety of the food system.

“Based on reports in Reuters and other news outlets, I understand that the United States Department of Agriculture will now have an important seat at the table to review this acquisition,” Stabenow said. “That’s great news for our farmers and families who are looking for certainty that the acquisition does not have national security implications or impact our food system. That is why I – alongside a bipartisan group of senators on the Senate Agriculture Committee – originally called for USDA to join this process and I will remain vigilant throughout this process.”

This week in Washington: May 23 27

This week both the House and Senate agriculture committees will hear from livestock producers about top concerns from the industry. The House Agriculture Committee starts it off first with another hearing it is Focus on the Farm Economy series: A view from the barnyard. The Senate Agriculture Committee has its livestock hearing planned for Thursday.

The House and Senate are in session this week before taking their summer recess.

Tuesday, May 24

House Ag subcommittee hearing on farm economy - Tuesday at 10:00 AM ET, the House Committee on Agriculture's Livestock and Foreign Agriculture Subcommittee will hold a hearing on "Focus on the Farm Economy: A View from the Barnyard." The hearing will address perspectives from various livestock and agriculture groups about the poor status of the general farm economy. To watch the hearing live via webcast or archived afterwards, click here.

Senate Environment and Public Works subcommittee on fisheries, water and wildlife – Tuesday at 2:30 p.m. the subcommittee will hold an oversight hearing entitled, “Erosion of Exemptions and Expansion of Federal Control –Implementation of the Definition of Waters of the United States.” To watch the hearing live or for more information, click here.

Wednesday, May 25

House Ag Committee hearing on food waste - Wednesday at 10:00 AM ET, the House Committee on Agriculture will hold a hearing on "Food Waste from Field to Table." The hearing will focus on the long-time issue of food waste in the retail produce and restaurant industries and look at innovative solutions to curb the problems. To watch the hearing live via webcast or archived afterwards, click here.

Wednesday, May 26

Senate Ag Committee hearing on livestock and poultry sector challenges - Thursday at 10:00 AM ET, the Senate Committee on Agriculture will hold a hearing on "A Review of the U.S. Livestock and Poultry Sectors: Marketplace Opportunities and Challenges." To watch the hearing live via webcast or archived afterwards, click here.

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