Bayer and Monsanto announced Wednesday morning they have signed “a definitive merger agreement” selling Monsanto to the German-based company for $66 billion, or $128 per share. If ultimately approved by anti-trust regulators, the deal would create the world’s biggest supplier of crop protection products and seed, dominating more than 30% of the market.
It's a Deal
The merged business will keep its global Seeds and Traits and North American commercial headquarters in St. Louis, the current home office of Monsanto. The global Crop Protection and Crop Science headquarters will remain at Bayer’s current offices in Monheim, Germany, Bayer said in a release. They will keep “an important presence” in Durham, N.C., “as well as many other locations throughout the U.S. and around the world.” The Digital Farming division will be based in San Francisco.
"We are pleased to announce the combination of our two great organizations,” Bayer CEO Werner Baumann said in the prepared release. “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, delivering substantial value to shareholders, our customers, employees and society at large."
Monsanto CEO Hugh Grant cited the all-cash aspect of the recently sweetened offer in his own comment Wednesday morning.
"Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto,” Grant said in the release. “We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration."
Monsanto’s Board of Directors, Bayer’s Board of Management and Bayer’s Supervisory Board unanimously approved the agreement, the companies said.
Leading the Market
Bayer positioned the deal as bringing “together two different, but highly complementary businesses. The combined business will benefit from Monsanto’s leadership in Seeds & Traits and Climate Corporation platform along with Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops in all key geographies.
“As a result, growers will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, digital agriculture, and crop protection.”
Bayer said that over time, the combined company “will be able to accelerate innovation and provide customers with enhanced solutions and an optimized product suite based on analytical agronomic insight supported by Digital Farming applications. These are expected to result in significant and lasting benefits for farmers: from improved sourcing and increased convenience to higher yield, better environmental protection and sustainability,” the company said.
The combined company could reach $67 billion in sales and occupy the top spot in seed and crop chemicals, according to industry reports.
But some U.S. farmers and farmer groups have expressed reservations that such a deal would benefit farmers.
"The National Farmers Union is troubled by the latest news of a proposed Bayer AG buyout of Monsanto Co., perpetuating a disturbing trend of further consolidation in the agricultural input sector, including seeds and crop protection products. We have continuously expressed our concern about the outcomes of further industry consolidation, such as the recent proposed merger between Dow Chemical Co. and DuPont Co. Family farmers, ranchers and consumers are the ones that lose out when we cripple competition, increase prices, and reduce innovation through industry megadeals," says Roger Johnson, president of the National Farmers Union, said earlier this year, when the Bayer/Monsanto proposal was first announced.
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Data visualization by Christopher Walljasper