Bayer offers US$62b cash to acquire Monsanto, creating agribusiness giant

The Monsanto logo is displayed on a screen where the stock is traded on the floor of the New York Stock Exchange on May 9, 2016.
The Monsanto logo is displayed on a screen where the stock is traded on the floor of the New York Stock Exchange on May 9, 2016.PHOTO: REUTERS

MELBOURNE (BLOOMBERG) - Germany's Bayer offered to acquire US-based Monsanto for about US$62 billion to create the world's biggest supplier of farm chemicals and genetically modified seeds.

The company offered US$122 per share in an all-cash bid, it said in a statement on Monday (May 23). That's a 20 per cent premium to Monsanto's last close in the US. Bayer expects total synergies from the deal of about US$1.5 billion after the third year.

Buying Monsanto gives Bayer a company that's both the world's largest seed supplier and a pioneer of crop biotechnology. The kind of genetically modified seeds that Monsanto started to commercialize two decades ago now account for the majority of corn and soybeans grown in the US. Monsanto also sells seeds in foreign markets including Latin American and India.

The offer marks a reversal of roles for Monsanto. The company previously sought to buy Swiss pesticide maker Syngenta, abandoning the US$43.7 billion bid in August after the other company refused to agree to a deal.

The crop and seed industry is being reshaped by a series of large transactions that may end up leaving just a few global players who can offer a comprehensive range of products and services to farmers. China National Chemical Corp agreed in February to acquire Syngenta for about US$43 billion, months after Monsanto abandoned its own bid for Syngenta. Meanwhile DuPont and Dow Chemical plan to merge and then carve out a new crop-science unit.