The Story of a Certain Takeover: Bayer vs Monsanto, Round Two


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23rd May 2016 Bayer placed an official offer to purchase the American tycoon in the market of Life Sciences - Monsanto. The company offered the amount of 62 billion U.S. dollars (USD 122 per stock) to perform the transaction. The resources to execute the takeover would be derived from the issue of stocks and via debt financing. Despite informal talks and negotiations conducted on the managerial level, Monsanto rejected the offer two days later. The management of Monsanto did not find the bid satisfactory with regard to its stated amount and expressed their doubts concerning the capacity of Bayer as capable of financing the takeover. The negotiations themselves, obviously, have not been definitely broken.

As it turns out, Bayer is not going to easily resign from the acquisition of Monsanto. On the 14th of July, a new bid was presented, as higher by three U.S. dollars per stock (USD 125 per stock). This implies that Bayer values Monsanto at 65 billion U.S. dollars. While referring to the concerns of Monsanto, Bayer assured the company that they would be able to finance the transaction, as well as it made the commitment to cover 1,5 billion U.S. dollars of the reverse antitrust breakup fee. By offering this, the company wanted to underscore its willingness to successfully complete the acquisition. This time, the rejection of the bid took Monsanto a bit longer, namely 5 days. 19th July 2016 it was announced that the offer was deemed "inadequate". Bayer representatives stated that they were disappointed, yet not going to discontinue their efforts to conclude the takeover.

Bayer is an international corporation that specialises in such areas as agricultural chemistry and the production of pharmaceuticals for humans and animals, among others. In 2015, the value of its sales amounted to 46.3 billion EUR. It employs more than 100 thousand workers all over the world. At the same time, Monsanto mainly specialises in the production of plant protection products, the area of biotechnology and the cultivation of new varieties of plants (including genetically modified soya and maize). In 2015, it generated 15 billion U.S. dollars from the sales of its products. Provided the transaction of this acquisition becomes successful, there will appear a giant of the Life Sciences industry in Europe, as not only offering a wide range of products from the field of agricultural chemistry, but also more than 2 thousand of arable crop varieties.

However, this will not be the sole large takeover of this kind to have been concluded throughout the recent years. In 2015, there occurred a merger of DowChemical and DuPont companies which resulted in the appearance of a giant worth more than 120 billion U.S. dollars (the stockholders of both companies finally approved the transaction on 20th July 2016).

ChemChina is next in line, having offered 43 billion U.S. dollars for Syngenta corporation.

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