Bayer ready to ramp-up $62 billion offer for Monsanto

German multinational chemical and pharmaceutical company Bayer may this week increase its all-cash offer for Monsanto.

It is reported that an improved offer could be put forward in the coming days after weekend meetings of Bayer’s executive team.

Last week US-based Monsanto, the world’s biggest producer of genetically modified (GM) seeds, rejected the German company’s offer of $122 per share, or an aggregate value of $62 billion.

“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,” Hugh Grant, Monsanto Chairman and CEO had said last week.

However, he added that Monsanto was open to “continued and constructive conversations” to assess whether a transaction can be achieved in the best interest of its shareholders.

According to media reports, sources on Wall Street said Bayer could return with an offer of up to $130 a share, valuing Monsanto at close to $66 billion.

However, analysts at the investment bank Jefferies are reported as saying that Bayer’s top bid may be as much as $140.

A Bayer-Monsanto deal would create the world’s biggest supplier of seeds and agrichemicals.

Bayer’s May 10- written proposal to Monsanto represents a premium of:

  • 37% over Monsanto’s closing share price of USD 89.03 on May 9, 2016
  • 36% over the three-month volume weighted average share price
  • 33% over the six-month volume weighted average share price

Credit Suisse and Bank of America Merrill Lynch are handling the bid for Bayer.

“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  CEO of Bayer, Werner Baumann.

“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  CEO of Bayer, Werner Baumann.

“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.”

The acquisition, if successful, would bring together leading Seeds and Traits, Crop Protection, Biologics, and Digital Farming platforms.

Bayer said the combined business would benefit from Monsanto’s leadership in Seeds and Traits and Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops.