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About $56 Billion for Monsanto Agreed to be Paid by Bayer

About $56 Billion for Monsanto Agreed to be Paid by Bayer
The world’s biggest maker of seeds and pesticides would soon be created as Bayer AG has reached an agreement to acquire Monsanto Co. for about $56 billion, reported the media citing sources and people familiar with the matter.
Sources also confirmed that an announcement of the new is imminent and that the German company agreed to pay about $128 a share. The courses have also said that the deal is supported by Bayer’s supervisory board. One of the sources reportedly said that an antitrust break fee of about $2 billion is also been offered by Bayer. If successful, it would be the largest ever by a German company and lead to the biggest deal this year.
Against a backdrop of a rapidly consolidating crop and seed industry as falling prices weighed on profits, the wooing of Bayer of St. Louis-based Monsanto has been on for quite some time. Just a few global players might be left by a series of big deals. While DuPont Co. and Dow Chemical Co. plan to merge and then carve out a new crop-science unit, China National Chemical Corp. agreed in February to acquire Syngenta AG.

Spokesmen for both companies declined to comment on the new proposal.
While Monsanto gained 1.6 percent to $107.74 before the opening of U.S. markets, Bayer rose 2.4 percent to 95.58 euros at 12:20 p.m. in Frankfurt trading.
An unsolicited offer for Monsanto of $122 a share was first made by Leverkusen, Germany-based Bayer in May. The company later raised that offer in July to $125. Terming both the proposals too low, Monsanto had rejected them. Later to conduct due diligence, Monsanto later granted access to some financial accounts and following that Bayer came back with a third offer of $127.50 last week.
Monsanto wants to be able to sell a comprehensive array of fertilizers and seeds to be used in conjunction with big data applications and become a one-stop shop for farmers and this ambition of the company served as one of the primary impetus for Monsanto. The company has said that this would allow farmers to increase productivity and yields to feed a growing world population. Making three failed offers as recently as last year for Swiss pesticide maker Syngentam, for years Monsanto has pursued the Swiss firm to boost its farm chemicals portfolio.
Commercialization of genetically modified organisms, or GMOs has been pioneered by Monsanto in the past two decades. More than 90 percent of corn and soybean crops in the U.S. are accounted for by these GMO varieties of corn and soybeans.
Now that may account for the high break fee. There have been concerns over whether the deal will be passed by competition authorities as the combination of both companies could account for more than 30 percent of the global crop-inputs business. There would potentially be fewer buyers ion the market for any assets sold off by Bayer-Monsanto to satisfy regulators given the recent industry consolidation.

Christopher J. Mitchell

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