Tue | Aug 22, 2017

Monsanto rejects US$62b Bayer bid, but still open to talks

Published:Wednesday | May 25, 2016 | 5:00 AM
This Aug. 31, 2015, file photo, shows the Monsanto logo seen at the Farm Progress Show in Decatur, Illinois. (AP Photo/Seth Perlman, File)
The logo of the chemical company Bayer at the Airport Berlin Brandenburg, in Schoenefeld, Germany.
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Monsanto rejected Bayer's US$62 billion takeover bid, calling it "incomplete and financially inadequate". However, the seed company suggested Tuesday that a higher bid might be accepted, saying that it remains open to talks.

Monsanto Company Chairman and CEO Hugh Grant also said in a written statement that the initial offer failed to address potential financing and regulatory risks.

Bayer, a German drug and chemicals company, made an all-cash bid that valued Monsanto's stock at US$122 each. The company previously said that it planned to finance the acquisition with a combination of debt and equity, the latter to be raised largely by issuing new shares.

A combination of the two businesses would create a giant seed and farm chemical company with a strong presence in the United States, Europe and Asia. Both companies are familiar brands on farms around the globe.

Bayer's farm business produces seeds as well as compounds to kill weeds, bugs and fungus. Bayer, headquartered in Leverkusen, Germany, employs some 117,000 people worldwide. It makes pharmaceuticals, over-the-counter medicines such as Aleve and Alka-Seltzer, and farm chemicals.

Monsanto, based in St Louis, produces seeds for fruits, vegetables and other crops, including corn, soybeans and cotton, as well as the popular weed-killer Roundup. It has more than 21,000 employees worldwide, about half of whom work the US in 33 states.

Bayer said on Monday, the all-cash offer values shares of Monsanto at US$122 each is 37 per cent higher than the closing price of US$89.03 on May 9, the day before Bayer made a written proposal to Monsanto.

Some people do not like Monsanto's business of selling genetically modified crop seeds. Such seeds have been blocked in some countries and have been a subject of anxiety among some consumers and the target of environmental activists.

 

UNLIKELY SELL

 

It is unlikely that Bayer will try to sell genetically modified Monsanto crop seeds in Europe, where political resistance to genetically modified crops remains strong.

Monsanto has only one product there in Europe, a pest-resistant variety of maize, and has given up on applications for more after officials failed to act on them despite approval by the European Food Safety Authority.

Liam Condon, head of Bayer's crop science division, said that "the whole discussion is a political one and we don't see that changing anytime soon".

Bayer says the head office for the combined seed business would be in St Louis, Missouri.