Bayer Confirms Acquisition of Monsanto for $66 Billion

The German chemical giant Bayer confirmed on Wednesday that it has signed an agreement to acquire the American seed and pesticide manufacturer Monsanto for $66 billion.

“Bayer and Monsanto announced today that they have signed a definitive merger agreement under which Bayer will acquire Monsanto in a cash transaction for $128 per share,” the two companies stated in a joint press release.

Bayer has repeatedly raised the value of its offer, which in its initial version at the end of May was $122 per share or a total of $62 billion. Monsanto rejected the offer, adding that they were “willing to continue” discussions.

In July, the German company raised its offer to $125 per share, and then last week to $127.50 per share. Both offers were rejected until today’s offer of $128 per share received the green light from the management of the American company.

“This is a significant step forward for our agri-tech business,” concluded Werner Baumann, CEO of the German company, in the statement.

The joint statement from the two companies emphasizes that the transaction “brings together two distinct but largely complementary” businesses.

Monsanto produces genetically modified seeds, and the data analytics offered to farmers by its Climate Corp will complement Bayer’s crop protection products well, the two companies explained in the statement.

The combined group will have a joint research and development budget of €2.5 billion.

The German company expects that thanks to the synergies related to the acquisition, it will increase its core earnings (EBITDA) by $1.5 billion within three years.

The agreement still needs to be approved by Monsanto’s shareholders and regulators, with Bayer reserving $2 billion for compensation in case the proposed transaction does not receive the necessary regulatory approvals in Europe and the United States.

The completion of the transaction is expected by the end of 2017.