Bayer, Monsanto Renew Talks for Possible $67 Billion MergerBy
In what would be its first large-scale acquisition as a pure-play life-sciences company, Bayer has confirmed that it is in “advanced negotiations” with the agrochemical and seed company, Monsanto, concerning a proposed transaction,in which Bayer would increase its offer to acquire Monsanto to $127.50 per Monsanto share, which would equate to approximately $67 billion. In July 2016, Bayer upped its original offer of $122 per share, or $62 billion, which it had made in May 2016, to $125 per share, or approximately $65 billion; both times Monsanto rejected the proposal.
In a statement, Bayer said that “while key terms and conditions have not yet been agreed, Bayer would be prepared to provide a transaction consideration of USD 127.50 per Monsanto share only in connection with a negotiated transaction. There can be no assurance that the parties will enter into an agreement.” The proposed transaction would be subject to regulatory approval and other customary closing conditions. The key conditions of a definitive transaction agreement must be approved by the supervisory board of Bayer AG.
In a statement, Monsanto confirmed that it has been engaged in “constructive negotiations” with Bayer, during which it has received an updated non-binding proposal for a potential acquisition of Monsanto for $127.50 per share in cash. Monsanto said it “is continuing these conversations as it evaluates this proposal as well as proposals from other parties and other strategic alternatives to enable its Board of Directors to determine if a transaction in the best interests of its shareowners can be realized.”
Bayer’s bid to acquire Monsanto is its first large-scale acquisition effort since becoming a pure-play life-sciences company with a focus on pharmaceuticals, crop science, and consumer healthcare with projected 2016 sales in its life-sciences business of approximately EUR 35 billion ($40 billion). Bayer’s focus on life sciences is being led by Werner Baumann, who became chairman of the board of management of Bayer AG on May 1, 2016, succeeding Marijn Dekkers. Bayer took on a new corporate structure in January 2016 with three divisions: pharmaceuticals, consumer health, and crop science, and a separate business unit, animal health. Bayer’s decision to focus on life sciences followed its decision to spin off its material science business. Bayer’s former MaterialScience subgroup, renamed Covestro, became legally and economically independent on September 1, 2015, and Covestro AG was floated on the stock market in October 2015. Bayer currently still owns around 69% of Covestro.
See related article, “The New Bayer Seeks Life Sciences Heights.”