Bayer has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto for $122 per share or an aggregate value of $62 billion.
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This offer, based on Bayer’s written proposal to Monsanto dated May 10, 2016, represents a substantial premium of 37 percent over Monsanto’s closing share price of $89.03 on May 9, 2016, 36 percent over the three-month volume weighted average share price, 33 percent over the six-month volume weighted average share price, and last twelve months EBITDA multiple of 15.8x as of February 29, 2016.
The acquisition of Monsanto would be a compelling opportunity to create a global agriculture leader, while reinforcing Bayer as a Life Science company with a deepened position in a long-term growth industry.
The combination is expected to provide Bayer’s shareholders with accretion to core EPS by a mid-single-digit percentage in the first full year after closing and a double-digit percentage thereafter.
Initially, Bayer expects annual earnings contributions from total synergies of approximately $1.5 billion after year three plus additional integrated offer benefits in future years.
This transaction would bring together Seeds & Traits, Crop Protection, Biologics, and Digital Farming platforms.
Specifically, the combined business would benefit from Monsanto’s leadership in Seeds & Traits and Bayer’s broad Crop Protection product line across a comprehensive range of indications and crops.
The combination would also be truly complementary from a geographic perspective, significantly expanding Bayer’s long-standing presence in the Americas and its position in Europe and Asia/Pacific. Customers of both companies would benefit from the broad product portfolio and the deep R&D pipeline.
Bayer is highly confident in its ability to finance the transaction based on advanced discussions with and support from its financing banks, BofA Merrill Lynch and Credit Suisse. The offer is not subject to a financing condition.
Bayer intends to finance the transaction with a combination of debt and equity. The expected equity portion represents approximately 25 percent of the transaction’s enterprise value and is expected to be raised primarily via a rights offering.
“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,†said Werner Baumann, CEO of Bayer AG. ■