German Bayer finally buys Monsanto with sweeter $66-billion proposal

German drugs and crop chemicals company Bayer has won over US seeds firm Monsanto with an improved takeover offer of around $66 billion (₹4.42 lakh crore), ending months of wrangling after increasing its bid for a third time.

German drugs and crop chemicals company Bayer has won over US seeds firm Monsanto with an improved takeover offer of around $66 billion (₹4.42 lakh crore), ending months of wrangling after increasing its bid for a third time.

The $128 a share deal, up from Bayer’s previous offer of $127.50 a share, is the biggest of the year so far and the largest cash bid on record. The deal will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.

However, competition authorities are likely to scrutinise the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover plan which they say risks overpaying and neglecting the company’s pharmaceutical business.

The transaction includes a break-fee of $2 billion (₹13,400 crore) that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.

Bernstein Research analysts said on Tuesday they saw only a 50 percent chance of the deal winning regulatory clearance, although they cited a survey among investors that put the likelihood at 70% on average

“We believe political pushback to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes to dissatisfaction with Monsanto leaving the US, could provide significant delays and complications,” they wrote in a research note.

Bayer said it was offering a 44% premium to Monsanto’s share price on May 9, the day before it made its first written proposal.

It plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.

At the time of going to print, Bayer shares were up 1.14% at 94.45 euros.