German drugs and crop chemicals company Bayer has won over U.S. seeds firm Monsanto with an improved takeover offer of around $66 billion, ending months of wrangling after increasing its bid for a third time.
The $128 a share deal, up from Bayer’s previous offer of $127.50 a share, is the biggest of the year so far and the largest cash bid on record.
The deal will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.
However, competition authorities are likely to scrutinize the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover plan which they say risks overpaying and neglecting the company’s pharmaceutical business.
The transaction includes a break-fee of $2 billion that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.
The details confirm what a source close to the matter told Reuters earlier.
Bernstein Research analysts said on Tuesday they saw only a 50 percent chance of the deal winning regulatory clearance, although they cited a survey among investors that put the likelihood at 70 percent on average
“We believe political pushback to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes to dissatisfaction with Monsanto leaving the United States, could provide significant delays and complications,” they wrote in a research note.
Bayer said it was offering a 44 percent premium to Monsanto’s share price on May 9, the day before it made its first written proposal.
It plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.
At 1140 GMT, Bayer shares were up 2.2 percent at 95.32 euros. Monsanto’s were up 0.2 percent at $106.3 in premarket trade.
Bayer’s move to combine its crop chemicals business, the world’s second largest after Syngenta AG, with Monsanto’s industry leading seeds business, is the latest in a series of major tie-ups in the agrochemicals sector.
The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers. That was also the idea behind Monsanto’s swoop on Syngenta last year, which the Swiss company fended off, only to agree later to a takeover by China’s state-owned ChemChina. Elsewhere in the industry, U.S. chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness. The Bayer-Monsanto deal will be the largest ever involving a German buyer, beating Daimler’s tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.
Bayer said it expected the deal to boost its core earnings per share in the first full year following completion, and by a double-digit percentage in the third year.
Bayer and Monsanto were in talks to sound out ways to combine their businesses as early as March, which culminated in Bayer coming out with an initial $122 per-share takeover proposal in May.
Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal.
Bayer said BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan had committed to providing the bridge financing.
BofA Merrill Lynch and Credit Suisse are acting as lead financial advisers to Bayer, with Rothschild as an additional adviser. Bayer’s legal advisers are Sullivan & Cromwell LLP and Allen & Overy LLP.
Morgan Stanley and Ducera Partners are acting as financial advisers to Monsanto, with Wachtell, Lipton, Rosen & Katz its legal adviser.
(Editing by Maria Sheahan and Mark Potter)
Trump rages at Sally Yates minutes before she testifies in the Senate: Greatest political crime of the century!
President Donald Trump lashed out at former Deputy Attorney General Sally Yates on Wednesday, just minutes before she was set to deliver her opening statement to the Senate Judiciary Committee.
“Sally Yates has zero credibility,” Trump tweeted, as Senate Judiciary Committee Chairman Lindsey Graham was speaking at the hearing.
“She was a part of the greatest political crime of the Century, and ObamaBiden knew EVERYTHING! Sally Yates leaked the General Flynn conversation? Ask her under oath. Republicans should start playing the Democrats game!“
Graham is accusing former Justice Department officials of abusing their power by surveilling some Trump’s associates during their investigation into Russia's interference in the 2016 election.
Trump makes pitch on Catholic TV: ‘Catholics like their Second Amendment so I saved the Second Amendment’
President Donald Trump this week made a pitch to Catholic voters based on his assertion that he "saved the Second Amendment."
In a Tuesday interview with the Catholic TV network EWTV, correspondent Tracy Sabol asked Trump if he had a message for Catholic voters.
"Well, I think anybody having to do with, frankly, religion, but certainly the Catholic Church, you have to be with President Trump when it comes to pro-life, when it comes to all of the things, these people are going to take all of your rights away, including Second Amendment," the president said, "because, you know, Catholics like their Second Amendment. So I saved the Second Amendment."
‘Jim Acosta is a fake reporter!’ Trump angrily denies reports that he ‘still doesn’t get’ coronavirus threat
CNN's Jim Acosta must have struck a nerve with President Donald Trump.
Trump angrily denied Acosta's reporting that some members of the president's coronavirus task force were alarmed that Trump kept trying to change the subject during Tuesday's meeting about the deadly pandemic, and sources familiar with the White House meeting feared he still doesn't understand the gravity of the situation.
“He still doesn’t get it,” the source said. “He does not get it.”
As some members of the task force tried to stress the dire nature of the situation to the president during the meeting, the source said Trump repeatedly attempted to change the subject.