Frankfurt | Reuters –– German drugs and chemicals group Bayer AG said it had made an offer to buy U.S. seeds company Monsanto for US$122 per share in cash, or a total value of $62 billion including debt, to create the world’s biggest agricultural supplier.
Bayer said on Monday that the proposal made to Monsanto’s management represented a 37 per cent premium over the closing price of Monsanto shares on May 9, before rumours of a planned bid emerged.
Monsanto disclosed last week that Bayer had made an unsolicited takeover offer for the group, triggering an investor backlash in which one of the German company’s major shareholders called the move “arrogant empire-building.”
Bayer said it planned to finance the deal with a combination of debt and equity, primarily via a rights offering. Equity would account for about a quarter of the deal value.
Bayer CEO Werner Baumann said Monday the proposed bid reflected Monsanto’s full value, when asked whether a sweetened bid could be on the cards.
“We are putting forward a very, very full price, looking at what Monsanto brings to the table. So that is where we’re at,” he told analysts on a conference call.
Bayer said it expects annual earnings contributions from synergies of around US$1.5 billion after three years, plus additional future benefits from integrated offerings, a reference to Bayer’s push to combine the development and sale of seeds and crop protection chemicals.
“We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” Baumann said in a statement.
Shares in Bayer were indicated 1.7 per cent lower in pre-market trade, after slipping around seven per cent last week.
Bayer’s offer values Monsanto at 15.8 times its 12-month earnings before interest, tax, depreciation and amortization (EBITDA) as of Feb. 29.
— Reporting for Reuters by Maria Sheahan and Ludwig Burger.