Bayer proposes $62bn offer to acquire Monsanto

German firm Bayer has proposed a $62bn offer to acquire Monsanto, which has raised concerns of investors that the firm is stretching its finances to become the world’s largest seed seller.

Based on Bayer’s proposal to Monsanto on 10 May, this offer represents a substantial premium of 37% more than Monsanto’s closing share price of $89.03 on 9 May; 36% over the three-month volume weighted average share price; 33% over the six-month volume weighted average share price

Bayer CEO Werner Baumann said: "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.

"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."

Bayer stated the merged entity will benefit from Monsanto’s leadership in seeds and traits, as well as Bayer’s extensive crop protection product line. This will also expand Bayer’s presence in the Americas and its position in Europe and Asia/Pacific.

Bayer AG member of the board of management and head of the crop science division Liam Condon said: "Bayer is committed to enabling farmers to sustainably produce enough healthy, safe and affordable food capable of feeding the world’s growing population.

"Faced with the complex challenge of operating in a resource-constrained world with increasing climate volatility, there is a clear need for more innovative solutions that advance the next generation of farming. By supporting farmers of all sizes on every continent, the combined business would be positioned as the partner of choice for truly integrated, superior solutions."

Bayer plans to fund the transaction with a combination of debt and equity. However, investors are concerned with the offer.

Bayer’s 14th biggest investor Union Investment’s fund manager Markus Manns was quoted by Reuters as saying: "The price that has now been disclosed is at the upper limit and it is just about economical. Should it rise further, which is to be assumed, the takeover will become increasingly unattractive."