rejects Bayer bid, but open to more talks
Send a link to a friend
[May 25, 2016]
By Greg Roumeliotis
(Reuters) - Monsanto Co, the world's
largest seed company, turned down Bayer AG's $62 billion acquisition bid
as "incomplete and financially inadequate" on Tuesday, but said it was
open to engage further in negotiations.
Monsanto's decision, first reported earlier on Tuesday by Reuters,
puts pressure on Bayer to decide whether to raise its bid, even as
the company faces criticism from some shareholders that its
$122-per-share cash offer is already too high.
Monsanto shares ended trading up 3.1 percent at $109.3 in New York,
substantially below Bayer's bid price, underscoring some investor
skepticism that a deal can be done. Bayer shares rose 3.23 percent
at 87.15 euros in Frankfurt.
"We believe in the substantial benefits an integrated strategy could
provide to growers and broader society, and we have long respected
Bayer’s business," Monsanto Chief Executive Hugh Grant said in a
"However, the current proposal significantly undervalues our company
and also does not adequately address or provide reassurance for some
of the potential financing and regulatory execution risks related to
the acquisition," he added.
Bayer responded that its $122 per share offer represents "full and
certain value" for Monsanto shareholders, but that it looks forward
to engaging in constructive discussions with Monsanto.
"We are confident that we can address any potential financing or
regulatory matters related to the transaction. Bayer remains
committed to working together to complete this mutually compelling
transaction," Bayer Chief Executive Officer Werner Baumann said in a
It was not clear what price Monsanto would be willing to sell for
but several analysts have suggested Bayer would have to pay much
more than the current offer to clinch a deal.
"We believe it is unlikely that the deal gets done at $122 and still
believe $135 is a more likely price," JPMorgan analysts wrote in a
research note last week.
Manning & Napier Advisors LLC, an investment management firm that is
Monsanto's 14th largest shareholder according to Thomson Reuters
data, agreed with Monsanto's decision to seek a higher offer.
"Monsanto's assessment that the initial offer was inadequate is
valid, as we believe it does not appropriately value the company’s
existing product portfolio," said Michael Knolla, a managing
director at Manning & Napier.
[to top of second column]
Global agrochemicals companies are racing to consolidate, partly in response to
a drop in commodity prices that has hit farm incomes. Seeds and pesticides
markets are also increasingly converging. This has driven Monsanto to consider a
tie-up to build strength.
Monsanto approached Bayer in March to express interest in its crop science unit,
Reuters reported at the time. Among the possibilities discussed were an outright
acquisition of the crop science unit and a joint venture, or other type of
partnership between the two companies.
ChemChina plans to buy Switzerland's Syngenta for $43 billion, after Syngenta
rejected a bid from Monsanto. Dow Chemical Co and DuPont are forging a $130
With German rival BASF SE having previously considered a tie-up with Monsanto,
Bayer has moved to avoid being left behind.
Leverkusen-based Bayer's unsolicited bid for Monsanto is the largest all-cash
takeover on record, according to Thomson Reuters data, just ahead of InBev SA's
$60.4 billion offer for Anheuser-Busch in June 2008.
Bayer said on Monday it would finance its cash bid with a combination of debt
(Reporting by Greg Roumeliotis in New York; Additional reporting by Karl Plume
in Chicago, Mike Stone in New York, Patricia Weiss in Frankfurt and Pamela
Barbaglia in London; Editing by Tiffany Wu, Bernard Orr)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.