Bayer (BAYN) Offers To Buy Monsanto (MON) In $62 Billion All-Cash Deal

UPDATE: 7:14 a.m. EDT — Shares of Bayer AG fell sharply Monday on the Frankfurt Stock Exchange, slipping to their lowest level since October 2013. At 1:14 p.m. local time (7:14 a.m. EDT), its shares were trading 3.5 percent lower from their close Friday.

Shares of Monsanto, on the other hand, had closed 0.96 percent higher Friday on the New York Stock Exchange and were up by over 8 percent before market opening Monday.

Original story:

German chemicals company and drugmaker Bayer AG disclosed Monday the details of its offer to acquire Monsanto for $62 billion. If the Missouri company becomes a part of Bayer, it would create the world’s largest supplier of agrichemicals and genetically modified seeds.

Bayer’s all-cash offer, made on May 10, of $122 for each share of Monsanto is a 37 percent premium over the latter’s closing price of $89.03 on May 9, and is about 20 percent higher than Friday’s closing price of $101.52. Thursday last week, Monsanto said it had received an offer from Bayer but did not disclose any details.

Bayer CEO Werner Baumann said the merged entity “would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.”

Bayer “intends to finance the transaction with a combination of debt and equity” and “expects annual earnings contributions from total synergies of approximately $1.5 billion after year three plus additional integrated offer benefits in future years.” Bank of America Merrill Lynch and Credit Suisse are the financing banks for Bayer. The equity portion of the payment would be about 25 percent of the total enterprise value of the transaction, and would be primarly raised through a rights issue.

Under the propsed transaction, headquarters for the global Seeds & Traits business would be St. Louis, Missouri, where Monsanto is based, while the Digital Farming division would be headquartered near San Francisco. The global Crop Protection and Crop Science units, meanwhile, would be based in Monheim, Germany and have a presence in Durham, North Carolina.