Since the last Bayer’s offer to buy Monsanto (NYSE: MON) with a price of $56 billion now gets a higher deal price. $66 billion and all in cash is the final number on the paper. This big movement for those two farm corporations not only obtained the attention to farm industry but also put a lot of work on the table of regulators.
The German pharmaceutical and chemical giant Bayer says it will buy U.S. seed seller Monsanto for $66 billion in an all-cash deal that will create the world's largest supplier of seeds and agricultural chemicals.
The takeover offer, which Monsanto has accepted, is $4 billion more than Bayer had initially offered and a 44 percent premium over Monsanto's stock price on May 9, a day before negotiations began. Bayer says it will be taking on $57 billion in debt to finance the purchase, which is the largest-ever foreign acquisition by a German company.
The two companies have little product overlap, but regulators might still be wary of the purchase, based on the combined control the company would have over agricultural products.
St. Louis-based Monsanto is the world's largest seller of seeds and the leading producer of genetically modified crops. Bayer, meanwhile, might be familiar to many for its aspirin products — but it's also a major player in pesticides. As the Two-Way has reported, "the company is a German pharmaceutical and chemical powerhouse with 102,000 employees and $41 billion in revenue last year. Like Monsanto, it sells agricultural products such as seeds and pesticides. That's in addition to a plastics business, diagnostic imaging products, health products for animals and a biotech division."
Besides, DuPont is merging with Dow, and the China National Chemical Corp. is buying Syngenta, which is currently the world's biggest seller of agricultural chemicals. All the big movements for large farm companies are merger together to fight for larger market and cost-saving business plan.
However, this huge buyout would post a lot of jobs for regulators. Reuters reports that Bernstein Research analysts give the deal a 50/50 chance of being approved by regulators. The analysts anticipate "political pushback" to the deal, including resistance from farmers, the wire service writes.
The deal comes as falling crop prices have caused a slide in farm profits which has cut into the amount that farmers can pay for chemicals and seeds. Besides, the deal is expected to be completed by the end of 2017. But should the deal fail to win regulatory approval, Bayer has agreed to pay a $2 billion fee.