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.
No comments:
Post a Comment