Considered one of the largest deal of the 2016, Bayer with acquisiton of Monsanto would control over a quarter of global supply of seeds and pesticides. This is assuming the merger is completed, as if Monsanto shareholders accepted the deal in December, it still requires regulatory approval.
Both companies have struggled to expand their market share while coping with low grain prices and decreased spending on crop sprays. While the merger highlights the lasting difficulty in finding growth in the agrichemical industry, Bayer’s chief executive is betting on an eventual uptick in demand for his products. Werner Baumann told the Financial Times in a December interview that he’s looking further into the future, when a rising global population will pressure farmers to increase output.
Under the terms of the merger agreement, Monsanto shareowners will receive $128 per share in cash at the closing of the merger.
“The acquisition of Monsanto is driven by our strong belief that this combination can help address the growing challenges facing farmers and the overall agriculture industry today and in the future,” said Werner Baumann, CEO of Bayer AG. “Together, Bayer and Monsanto will be able to offer the new, innovative solutions that our customers need. We look forward to completing the transaction and working closely with Monsanto to ensure a successful integration.”
The transaction is subject to customary closing conditions, including the receipt of required regulatory approvals. Bayer, with the support of Monsanto, has now submitted a number of filings, including the U.S. Hart-Scott-Rodino Act filing. Closing is expected by the end of 2017.
Source: Finacial Time, Fortune, Monsanto Press Release