Bayer signs agreement to acquire Monsanto

Bayer has signed a definitive agreement to acquire Monsanto for $128 per share in an all-cash transaction.

The deal has been approved by the board of directors of both companies.

Bayer AG CEO Werner Baumann said: “We are pleased to announce the combination of our two great organizations.

“This represents a major step forward for our crop science business and reinforces Bayer’s leadership position as a global innovation-driven life science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large.”

Based on Monsanto’s closing share price on 9 May, which was the day before Bayer’s first written proposal to Monsanto, the offer represents a premium of 44% to that price.

Monsanto chairman and chief executive officer Hugh Grant said: “Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto.

“We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration.”

The deal will enable both the firms to share their innovation capabilities and R&D technology platforms which would speed up innovation and provide customers new and better solutions, as well as an optimised product suite.

Bayer intends to finance the transaction with a combination of debt and equity. The equity component of approximately $19bn is expected to be raised through an issuance of mandatory convertible bonds and through a rights issue with subscription rights.

Bridge financing for $57bn has been committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.

The acquisition is subject to customary closing conditions, including Monsanto's shareholder approval of the merger agreement and receipt of required regulatory approvals, and it is expected to close by the end of next year.

Bayer will pay a reverse anti-trust break fee of $2bn.

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Image: Bayer CEO Werner Baumann (left) and Monsanto CEO Hugh Grant shake hands. Photo: courtesy of Bayer.