Bayer Clinches Monsanto Takeover for $66B

The deal continues the wave of consolidation in agribusiness, pairing Bayer's strength in crop chemicals with Monsanto's portfolio of seed products.
Matthew HellerSeptember 14, 2016

Monsanto has finally succumbed to the overtures of Germany’s Bayer AG, agreeing to a $66 billion takeover that will create an agribusiness giant spanning both crop chemicals and seeds.

Bayer’s sweetened offer of $128 a share works out to a 44% premium to Monsanto’s share price on May 9, the day before the German firm made its first written proposal. It is the largest deal of the year so far and the biggest takeover ever of a foreign company by a German one.

“This represents a major step forward for our crop science business and reinforces Bayer’s leadership position as a global innovation-driven life science company with leadership positions in its core segments,” Bayer CEO Werner Baumann, who had pushed the takeover since taking office May 1, said Wednesday in a news release.

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Monsanto has been an independent company since it was founded in 1901. Its chief executive, Hugh Grant, said the deal “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.”

Well-known for drugs such as Aspirin, Alka-Seltzer, and Claritin, Bayer also is a leader in herbicide and pest control products used by farmers around the world. Monsanto produces seeds for crops like alfalfa, canola, corn, cotton, sorghum, soybeans, sugarbeets, and wheat.

The companies expect the world population to grow by 3 billion people by 2050, creating an increased need for improved crop yields and sustainability.

The Wall Street Journal said the deal heavily tilts Bayer “toward agriculture in a long-range bet on high-tech crops to sustain a growing global population,” but also spotlights a sagging U.S. farm economy that “shows few signs of rebounding as U.S. farmers prepare to reap another record corn and soybean crop this autumn.”

The agribusiness industry has experienced a recent wave of consolidation, with Dow Chemical and DuPont pursuing a merger, and Swiss pesticide giant Syngenta AG agreeing to a $43 billion takeover by China National Chemical.

“Bayer and Monsanto would be two of the remaining agribusiness giants to merge, and regulators are likely to scrutinize whether the deal could raise prices that farmers pay for seeds and chemicals,” The New York Times said.