Bayer Ups Offer to Acquire Monsanto to Approximately $65 Billion
Bayer has raised its all-cash offer to Monsanto shareholders in its bid to acquire Monsanto, an agricultural chemical and seed company, as part of Bayers’ life-science strategy. Bayer increased its offer from $122 to $125 per share or from approximately $62 billion to $65 billion verbally on July 1, 2016 and in an updated proposal submitted to Monsanto on July 9, 2016. In addition, Bayer said it has addressed Monsanto's questions concerning financing and regulatory matters and is prepared to make certain commitments to regulators, if required, to complete the proposed acquisition of Monsanto.
Bayer had first made a bid of approximately $62 billion to acquire Monsanto in May 2016, a proposal that Monsanto had rejected. 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 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.
Bayer reaffirmed that its offer to Monsanto provides transaction certainty and would not be subject to a financing condition. A syndicated loan facility agreement sufficient to provide the entire transaction financing is ready and prepared to be co-underwritten by five banks (BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan).
Bayer said it remains confident in its ability to obtain all necessary regulatory approvals in a timely manner given complementary geographic and product portfolios. In addition to certain commitments to regulators, should they be required, Bayer has offered a $1.5 billion reverse antitrust break fee to reaffirmits confidence in a successful closing.
The specific terms of any definitive transaction agreement remain subject to the final approval of Bayer's Supervisory Board.