Bayer To Buy Monsanto For $128/shr In Cash

(RTTNews) - German conglomerate Bayer AG (BAYZF.PK, BAYRY.PK, BYR.L) said Wednesday that it agreed to buy U.S. seed firm Monsanto Co. (MON) for US$128 per share in an all-cash transaction.

Monsanto's Board of Directors, Bayer's Board of Management and Bayer's Supervisory Board have unanimously approved the agreement.

Based on Monsanto's closing share price on May 9, 2016, the day before Bayer's first written proposal to Monsanto, the offer represents a premium of 44 percent to that price.

Pro forma sales of the combined business amounted to 23 billion euros in calendar year 2015.

Bayer expects the transaction to provide its shareholders with accretion to core earnings per share in the first full year after closing and a double-digit percentage accretion in the third full year.

Bayer has confirmed sales and cost synergies assumptions in due diligence and expects annual EBITDA contributions from total synergies of about US$1.5 billion after year three, plus additional synergies from integrated solutions in future years.

Bayer said it intends to finance the transaction with a combination of debt and equity. The equity component of about US$19 billion is expected to be raised through an issuance of mandatory convertible bonds and through a rights issue with subscription rights. Bridge financing for US$57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.

The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals expected by the end of 2017.

Bayer stated that the companies will work diligently with regulators to ensure a successful closing. In addition, Bayer has committed to a US$2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals.

Earlier this month, Bayer had confirmed advanced negotiations with U.S. seed firm Monsanto and sweetened its offer again to $127.50 per share.

Bayer, which has been discussing a deal with Monsanto since mid-May, had offered $125 per share earlier. But, the sweetened $64 billion offer was rejected by Monsanto in July, stating it as financially inadequate and insufficient to ensure deal certainty. Bayer's initial offer for Monsanto was $122 per Monsanto share.

In the pre-market, MON is currently trading at $106.37, up $0.27 or 0.25 percent.