Bayer Confirms Market Speculation, Offers To Acquire Monsanto At $122/Share To 'Create A Global Agriculture Leader'

Germany-based Bayer publicly disclosed Monday morning details of its proposed acquisition of Monsanto Company MON following market speculation and stakeholder inquiries last week.

Pricing

Bayer confirmed it has made an all-cash offer to acquire all of Monsanto's common stock for $122 per share, valuing the company at $62 billion. The offer price represents a 37-percent premium over Monsanto's closing price of $89.03 on May 9 — the final trading day before market speculation of the acquisition surfaced.

Shares of Monsanto were trading higher by nearly 7 percent, but still notably below the acquisition price, at $108.54.

The acquisition price also represents a 36 percent premium to Monsanto's three-month volume weighted average share price.

Expectations

Bayer noted that the acquisition represents a "compelling opportunity" to "create a global agricultural leader" and reinforce itself as a life science company with a "deepened position in a long-term growth industry." The company also expects the acquisition to be accretive to its core earnings per share by a mid-single-digit percentage point in the first full year after closing and a double-digit percentage thereafter.

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Bayer also expects the acquisition to generate $1.5 billion in annual synergy savings after three years, in addition to further integrated benefits in the following years.

"We have long respected Monsanto's business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies' shareholders," said Werner Baumann, CEO of Bayer AG. "Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate."

"Bayer is committed to enabling farmers to sustainably produce enough healthy, safe and affordable food capable of feeding the world's growing population," said Liam Condon, member of the board of management of Bayer AG and head of the crop science division. "Faced with the complex challenge of operating in a resource-constrained world with increasing climate volatility, there is a clear need for more innovative solutions that advance the next generation of farming. By supporting farmers of all sizes on every continent, the combined business would be positioned as the partner of choice for truly integrated, superior solutions."