A Bayer-Monsanto merger is expected to take place sooner as Bayer ups its offer—again – from about $128 per share to $129, nearing the $130 per share minimum price that Monsanto expects to get for any possible takeover to push through.
Bayer, the German chemical and pharmaceutical goliath, looks forward to strengthening its hold in the agricultural sector further through this risky but potentially ingenious move. With their stronghold in pesticides and Monsanto’s leading seed brands, these two giants will surely overtake similar companies belonging to the “Big 6” biotech corporations. This includes DuPont, Dow Chemical Co., BASF, and Syngenta.
However, investors are somehow skeptical with the attempts to increase the bid since Monsanto has been trading lower than the previous three offers made by Bayer. The latest offer is 22% higher than the former company’s closing price on Tuesday which fell down by 1.3% at $106.07 while Bayer closed at 95.69 Euros, rising by 1 percent.
The bid that started in mid-May at $122 per share, which was outright rejected by Monsanto for being “too low”, was further raised to $125 a share in July and to $127 in early September—both of which were also rejected.
Aside from the acquisition bid, Bayer also offered a reverse break-up fee amounting to about $3 billion. This was to ensure that in the event of antitrust watchdogs in Europe, America, and Asia upsetting the deal, Monsanto is guaranteed enough protection.
Although the US agrochemical and agrobiotechnology giant has long seen itself as a potential buyer, events might have proven otherwise. Previous attempts to acquire similar companies like Syngenta and parts of BASF never materialized.
Though many think that this acquisition will result to the world’s largest agrochemical business, Bayer’s high net debt—amounting to €17.45 billion ($19.71 billion) — gives analysts enough reason to question if this might hurt Bayer more than help it.
The proposal is assumed to be approved as early as Tuesday.