Monsanto accepts $66bn Bayer takeover

14.09.2016

Monsanto has accepted a takeover offer from Germany's Bayer at $128 a share, the BBC has learned.

The move would be the biggest all-cash deal ever and will form the world's biggest seeds and pesticides company worth $66bn (£50bn).

As well as farm-products, Bayer also sells healthcare products including Alka-Seltzer.

Monsanto is known for its genetically modified seeds for crops including corn, soybeans, cotton and wheat.

The use of such seeds has been attacked by some environmental activists.

The tie-up, which will give the new company control of more than 25% of the world's supply of seeds and pesticides, comes amid a wave of mergers in the agriculture sector.

Falling crop prices have seen farmers cutting back on buying seeds and agricultural chemicals, such as herbicides and pesticides, leading to lower profits for suppliers.

Concerns

The industry has been fighting back in order to save business costs.

Rivals including Dow Chemical, DuPont and Syngenta have all announced tie-ups recently, although some have yet to be cleared by regulators.

Farming groups have raised concerns that such mergers could lead to fewer choices and higher prices while opponents of genetically modified food in Europe worry about Monsanto's influence on the continent.

Bayer's takeover of Monsanto is likely itself to attract close scrutiny from anti-competition regulators because of the sheer size of the combined company and the control it would have over the global seeds and sprays markets.

Professor John Colley of Warwick Business School said: "Bayer's acquisition of 'Frankenstein' crop producer Monsanto could be a horror story for both Bayer and its customers: the farmers."

He said there were a number of worrying issues: "The farmers will lose out as product ranges are rationalised and attempts are made to increase prices.

"Clearly Bayer will realise cost savings from the acquisition, but they have had to pay an enormous price for Monsanto at a 45% premium to the previously undisturbed share price."

There is a $2bn break fee if the deal does not complete.

Bayer shares are 3% higher in Frankfurt. Monsanto shares were up 1.6% ahead of the US market open.


BBC

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