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Monsanto Says No To New Bayer Buyout; Open To Talks

Despite a "sweetened" deal totaling $64 billion, the agrochemical giant rejected the new "incomplete and financially inadequate" Bayer offer.

A merger or acquisition of Bayer and Monsanto would create the largest seed and chemical company in the world.

U.S. agrotechnology and seed company Monsanto turned down a second buyout offer from Bayer AG this week, saying they’re open to more talks with the German healthcare company – and well as other parties.

Bayer offered Monsanto $62 billion, or $122 a share, in May to acquire the company. Monsanto officials called that offer “incomplete and financially inadequate.”

So the German company “sweetened” their offer to $125 a share for a total offer of $64 billion, and threw in a $1.5 billion reverse antitrust breakup fee – about 2.3 percent of the total deal value.

But Bayer faced continued rejection after the Monsanto board unanimously agreed this week that amount – the largest all-cash bid on record – still wasn’t enough.

Bayer said it was “disappointed” with the rejection, especially in light of Monsanto’s “recent weak business performance.”

And Bayer isn’t wrong. Monsanto’s income fell 37 percent to $717 million in the last quarter, citing a global glut of glyphosate – the active ingredient in Roundup – and delays in European Union approval for importing next-generation soybeans.

At the heart of the continued rejection is the issue of confidentiality and access to Monsanto’s financial information. Bayer says it can’t make a more financially appropriate offer without full access to Monsanto’s financial information. Some analysts say $135 to $140 a share is a more realistic price.

Bayer plans to continue to court Monsanto, despite hesitation from stakeholders like Henderson Global Investors, Bayer’s 16th-largest shareholder.

“After meeting with Bayer management at the end of May, we were still not convinced the transaction will create value,” said Henderson’s European equities fund manager Asim Rahman.

Read More:

  • Monsanto rejects Bayer’s sweetened offer, open to talks (Reuters)
  • Monsanto Rejects Bayer’s Sweetened Merger Offer (Wall Street Journal)
Taylor Killough

Taylor Killough has degrees anthropology and journalism. She has worked with the oral history project StoryCorps. A nomad at heart, she recently returned to Louisville, Kentucky, where's she's excited to have her own kitchen and garden again.

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