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.”