Bayer,Monsanto Sign Merger Agreement, Now the Tough Part:Regulators
Bayer,Monsanto Sign Merger Agreement, Now the Tough Part:Regulators By Charlie Gasparino , Brian Schwartz Published September 13, 2016 Click For FOX Business News
German chemical giant Bayer is nearing a deal to acquire U.S. seed behemoth Monsanto (MON) in an all cash deal that could be announced as early as Wednesday morning the FOX Business Network has learned.
The deal, which is not finalized, comes after months of wrangling between the two companies. Bayer has agreed to pay $128 per share.
While the deal is not completed as of publication people close to both companies are optimistic an announcement is imminent baring last minute hitches.
Sources say the deal terms may include a significant breakup fee, which one source pegs at $2 billion that Bayer would pay to Monsanto if the transaction falls through due to U.S. and/or European anti-trust concerns that analysts say will be raised as regulators take a closer look at the combined companies.
The deal combines St. Louis-based Monsanto, known for its genetically modified crop seeds, and Bayer, the German manufacturer of a wide range of pesticides as well as aspirin. When putting the two together, it creates an agricultural giant with a specialty in seeds and pesticides and annual sales estimated at $67 billion.
The announced merger would be the biggest deal of 2016 and after Monsanto rejected two previous lower offers by Bayer. But even as Monsanto held out for a higher or other bid the reality of its business began to hit home; commodity prices have been hammered in recent years, thus taking a chunk out of Monsanto’s stock price that traded as high as $125 a share in February of last year. Today it is hovering around the $106 level.
The deal is also a gamble for Bayer’s chief executive Werner Baumann, who despite some resistance from investors continued to push for the Monsanto transaction. Baumann has made the case to investors and analysts that acquiring Monsanto is key to Bayer’s growth strategy, though many worried that the company would add too much debt if it paid close to $130 a share, the speculated final price.