Bayer lands $66B Monsanto deal
- Bayer announced Wednesday it has finally completed its pursuit of agricultural giant Monsanto, paying $66 billion to acquire the company.
- The $128 per share all-cash deal will make Bayer a go-to for farmers, combining Monsanto's seed business with Bayer's crop chemical treatments.
- Bayer claims that $1.5 billion in annual synergies will be realized by year three. The deal is expected to be accretive to Bayer earnings after the first full year of combination. The transaction is expected to close by the end of 2017.
"We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow," said Monsanto Chairman and CEO Hugh Grant in a statement.
Bayer intends to pay for the acquisition through a combination of debt and equity. The company intends to raise approximately $19 million in equity through issuance of mandatory convertible bonds.
Bridge financing for $57 billion will also be provided by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan. There is a $2 billion break-up fee should the deal go sour.
It was rumored that Bayer could potentially sell off its dermatological business to help fund the acquisition, according to a report in Bloomberg several days ago.
Bayer will continue to have facilities in several locations including its global Seeds & Traits and North American commercial headquarters in St. Louis, MO and its global Crop Protection and overall Crop Science headquarters in Monheim, Germany. The company will also retain a large presence in Durham, NC and will have its Digital Farming activities in San Francisco, CA.
The deal could face push back from regulators due to the size of the tie up and over concerns of Monsanto leaving the U.S.
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