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.