Monsanto Rejects Bayer's Sweetened Merger Offer--Update
19 Juli 2016 - 8:32PM
Dow Jones News
By Jacob Bunge and Anne Steele
Monsanto Co. on Tuesday again rejected Bayer AG's takeover
proposal, saying Bayer's improved $65 billion bid still undervalued
the biotech seed giant -- but it left the door open to further
talks with Bayer and "other parties."
Monsanto called Bayer's bid, which the German company raised
last week, "financially inadequate" and "insufficient to ensure
deal certainty." Monsanto's board of directors unanimously rejected
it.
"Bayer is looking forward to continued dialogue with Monsanto
under an appropriate confidentiality agreement allowing access to
additional information," Bayer said Tuesday in a press release.
A Bayer spokesman declined to explain if the two companies have
reached a confidentiality agreement, and said that the dialogue
with Monsanto would continue.
Bayer voiced disappointment over Monsanto's decision to reject
Bayer's increased takeover offer.
"The revised all-cash offer is a compelling opportunity and
represents immediate and certain value for Monsanto shareholders
amid recent weak business performance and Monsanto's reduced
mid-term outlook," Bayer said.
Bayer is pursuing what would be the latest in a succession of
multibillion-dollar merger agreements that would reorder the $100
billion global market for agricultural seeds and pesticides, which
has struggled against a slide in crop prices. The German
pharmaceutical maker, which runs an agricultural division heavily
focused on pesticides, sees Monsanto's number-one global position
in seeds and crop genes as a way to create a sector leader that
could develop high-tech seeds, crop sprays and other farm services
in tandem.
After bidding $122 a share for Monsanto in May, Bayer raised its
offer to $125 a share verbally on July 1 and more formally eight
days later, it said in a July 14 statement. Bayer also said it had
lined up financing from a group of banks, and pledged to pay
Monsanto $1.5 billion if regulators torpedoed the deal.
Analysts had expected Monsanto to turn down Bayer's higher
offer, however, estimating a sale price around $135 to $140 a
share.
Some Monsanto investors have said Bayer should pay more for the
world's largest seed company, despite Monsanto's recent struggles
in the slumping farm economy. Monsanto, which is focused entirely
on agriculture compared with more-diversified rivals like Bayer and
DuPont Co., last month reported profit in its latest quarter below
analysts' expectations, as sales fell 8.5%.
While some Monsanto investors say they are interested in a sale
at the right price, they are concerned about selling at a low point
in the cyclical agricultural business, after three straight years
of declining crop prices have U.S. farm income on track to hit its
lowest level since 2002.
Monsanto Chief Executive Hugh Grant told investors on an
earnings conference call last month that Monsanto also had been
discussing alternative deals.
A tie-up between Monsanto and Bayer would be the latest
blockbuster merger in the agricultural sector. Shareholders of Dow
Chemical Co. and DuPont, both major seed and pesticide makers, this
week are scheduled to vote on a merger deal agreed in December.
Switzerland's Syngenta AG -- which Monsanto unsuccessfully pursued
last year -- agreed in February to a $43 billion takeover by China
National Chemical Corp.
Buying Monsanto also would reshape Bayer itself, making
agriculture roughly half its overall sales, which has rattled some
investors who view the company more as a health-care player than a
producer of crop seeds.
Friedrich Geiger contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
July 19, 2016 14:17 ET (18:17 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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