German pharmaceutical and chemical giant Bayer AG today announced a USD 62-billion all-cash offer to acquire US-based biotechnology major Monsanto Co, which has a significant presence in India.
Monsanto, which played a key role in increasing cotton output through its genetically modified technologies, had earlier said its board was reviewing the “unsolicited and non-binding proposal” in consultation with financial and legal advisors.
The US giant has three entities in India — Monsanto India Ltd (MIL), Monsanto Holdings Pvt Ltd (MHPL) and JV firm Mahyco Monsanto Biotech India Ltd (MMBL) with a staff strength of more than 1,000. Of the three firms, MIL is listed and had posted an annual turnover of Rs 580 crore last fiscal.
Bayer AG today disclosed that it “has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto Company for USD 122 per share or an aggregate value of USD 62 billion".
Bayer, which had made the written proposal to Monsanto on May 10, offered to buy each share at USD 122, which is over 37 per cent higher than the Monsanto’s closing share price of USD 89.03 on May 9, 2016, the Leverkusen-based company said in a statement.
The company would finance the deal with an aim to create a global behemoth in agriculture with a combination of debt and equity. The expected equity portion represents 25 per cent of the transaction’s enterprise value and is expected to be raised primarily through a rights offering.
BofA Merrill Lynch and Credit Suisse are acting as lead financial advisors to Bayer and will support the financing of the transaction, it added.
Bayer said its board has unanimously approved the proposal and is fully committed to pursuing the transaction.
“Bayer is prepared to proceed immediately to due diligence and negotiations and quickly agree to a transaction.
The transaction will be subject to customary closing conditions,” the statement added.
Commenting on the proposed deal, Bayer AG CEO Werner Baumann said: “We have long respected Monsanto’s business and shared their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders.”
The combined business would benefit from Monsanto’s leadership in seeds and traits and Bayer’s broad crop protection product line across a comprehensive range of indications and crops, the company said.
The deal would also expand Bayer’s long-standing presence in the Americas and its position in Europe and the Asia-Pacific.
In India, Monsanto sells hybrids seeds and herbicides through MIL and MHPL, while MMBL, which is a 50:50 joint venture between MHPL and Mahyco, sells Bollgard range of technologies to cotton seed firms. Separately, MHPL has 26 per cent stake in seed company Mahyco.
Bayer CropScience, a listed entity in India, posted a turnover of Rs 3,818.6 crore last fiscal. Besides crop science, Bayer also has interest in pharmaceuticals, animal health and consumer health in the country.