German drug and crop chemical maker Bayer clinched a $66 billion takeover of US seeds company Monsanto on Wednesday, ending months of wrangling with a third sweetened offer that marks the largest all-cash deal on record.
The $128-a-share deal, up from Bayer’s previous offer of $127.50 a share, has emerged as the signature deal in a consolidation race that has roiled the agribusiness sector in recent years, due to shifting weather patterns, intense competition in grain exports and a souring global farm economy.
The proposed merger will likely face an intense and lengthy regulatory process in the United States, Canada, Brazil, the European Union and elsewhere. Hugh Grant, Monsanto’s chief executive, said Wednesday the companies will need to file in about 30 jurisdictions for the merger.
Competition authorities are likely to scrutinize the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover that they say risks overpaying and neglecting the company’s pharmaceutical business.
However, if the deal closes, it will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.
One Stop Shop
Bayer’s move to combine its crop chemicals business, the world’s second-largest after Syngenta AG, with Monsanto’s industry-leading seeds business, is the latest in a series of major agrochemicals tie-ups.
The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers.
The Bayer-Monsanto deal will be the largest ever involving a German buyer, beating Daimler’s tie-up with Chrysler in 1998, which valued the US carmaker at more than $40 billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.
Bayer said it expected the deal to boost its core earnings per share in the first full year following completion, and by a double-digit percentage in the third year.
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