The German pharmaceutical giant’s$62 billion offer would acquire all of Monsanto’s stock shares.
By Madeleine Thomas
The Bayer headquarters in Leverkusen, Germany. (Photo: Roberto Pfeil/AFP/Getty Images)
Editor’s Note — May 24, 2016:On Tuesday afternoon, Monsanto announced that it had rejected Bayer’s offer, calling the proposition “incomplete and financially inadequate,” according to a press release. The company remains open to further negotiations, however.
On Monday, the German pharmaceutical and chemical giant Bayer AG confirmed plans to acquire Monsanto, the world’s largest producer of genetically modified seeds. Should the merger go through, it will effectively create the largest agrochemicals and seed company in the world.
“In 2050, more than three billion additional people will need feeding. That’s six times as many people as live in Europe today and it’s one of the great challenges of our time,” Werner Baumann, Bayer’s chief executive officer, said in a press conference. “We’re convinced the proposed acquisition of Monsanto can contribute significantly to solving this challenge.” If the deal is approved by shareholders and anti-trust regulators, it will mark the largest foreign takeover by a German company.
Bayer’s $62 billion, cash-only offer would acquire all of Monsanto’s stock shares, currently valued at around $122 each. That’s 37 percent higher than the company’s closing share price on May 9 — $89.03 — the day before Bayer submitted its written offer to Monsanto.
As much as 80 percent of the country’s corn and 90 percent of its soybeans may already contain seed traits patented by Monsanto.
“Bayer has long respected Monsanto’s business, management team, strong innovation capabilities and commitment to farmers,” Baumann and his colleague Liam Condon, president of Bayer’s crop science division, wrote in a letter to Hugh Grant, Monsanto’s chief executive officer, on May 10. “This would bring together Monsanto’s leadership in Seeds & Traits with Bayer’s leadership in Crop Protection and Biologics, and our combined focus on Digital Farming. Additionally, we would also combine our research and development capabilities, creating an innovation powerhouse to develop solutions for farmers around the world.”
Critics of the mega-merger worry that having one company in control over most of the supply chain for pesticides and genetically modified crops could prove particularly troublesome for farmers. Monsanto has already come under scrutiny in recent years as the largest supplier of genetically engineered seeds in the world, and as the subject of a three-year antitrust investigation by the Department of Justice into whether the company was practicing anticompetitively in the country’s seed market.
As much as 80 percent of the country’s corn and 90 percent of its soybeans may already contain seed traits patented by Monsanto. With the merger, Bayer would also control up to 28 percent of the world’s pesticide market, analyst Ulrich Huwald from Warburg Research told ABC News.