Agri-biotechnology Briefing

Bayer to Buy Monsanto in $66 Billion All-cash Deal

Bayer has offered to acquire Monsanto in an all cash $66 billion deal which represents a 44 percent premium to Monsanto shareholders, Bayer announced in a press release.  The merger brings Monsanto’s leadership in seeds, traits and digital farming (using data analytics to apply precise quantities of nutrients and sprays with satellite guidance of farm machinery) with Bayer’s crop protection chemicals business. Annual savings of $1.5 billion are expected from the third year onwards. The combined entity will have an annual R&D budget of about $3 billion.  The entire budget of the Indian Council of Agricultural Research is less than $1 billion. Regulatory approval for the merger across 30 countries will take about a year.  The headquarters of the seeds and traits business will be in St Louis, Missouri, which is that of Monsanto, the crop protection business will be run out of Germany and Ireland, while the digital agriculture business will operate from San Francisco.  Monsanto is the leader in seeds and traits. Bayer is No 2 after Syngenta in crop protection chemicals.  With Monsanto’s weed-killer Roundup (glyphosate) added to the portfolio, the new company will be the No 1 in this space.  The two companies have annual sales of $28 billion. The acquisition will be funded $19 billion in bonds and equity. The rest will be through bridge financing from banks. Regulators will have to approve the merger.  If not, Bayer will pay Monsanto $2 billion.

Activists opposed to genetic engineering will have to re-orient their communication strategy. The initial shots have been fired. (See next story on this page).

(Top photo of Werner Baumann, CEO of Bayer (left) with Hugh Grant, Chairman and CEO of Monsanto.   Bayer photo).

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