Wednesday, September 14, 2016

Bayer ups takeover bid of Monsanto to $66 billion

Bayer AG's $66 billion approved takeover bid of Monsanto Co. would "create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry," Greg Roumeliotis and Ludwig Burger report for Reuters. "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."

"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," Roumeliotis and Burger write. "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."

Bernstein Research gave the deal a 50 percent chance of winning regulatory clearance, "although they cited a survey among investors that put the likelihood at 70 percent on average," Roumeliotis and Burger write. They wrote: "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 U.S., could provide significant delays and complications." (Read more)

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