Bayer AG plans to close its $63-billion acquisition of Monsanto Company (MON) by this Thursday. Bayer said it would keep its name and drop the century-old Monsanto name while the acquired products will retain their brand names and become part of the Bayer portfolio. Bayer is keen to close the deal before June 14 because beyond it, Monsanto has the option to back off from the sale and demand a higher price.
The $63 billion purchase price includes Monsanto’s outstanding debt. Bayer is looking to raise $30 billion through a sale of shares and bonds as part of the financing. The combined company is expected to have sales of more than $23 billion. The deal, which is expected to create the biggest producer of seeds and pesticides, involved the largest divestiture required by US regulators for $9 billion. Bayer agreed to sell $9 billion of assets to BASF to gain clearance for the transaction.
The deal involved the largest divestiture required by US regulators for $9 billion
The deal not only faced substantial regulatory hurdles in various countries but also encountered a lot of protests from several groups which included farmers, environmental activists, and others. Monsanto’s reputation has long suffered from several allegations that its products contained carcinogenic chemicals. Several factions criticized the deal saying it would hurt competition and result in price increases while holding protests and demonstrations to block the transaction.
These concerns have heightened following the increasing consolidation among the few major companies in the agriculture industry. The Dow-DuPont and ChemChina-Syngenta mergers have already reduced the number of players in the sector. Bayer said it would work to reach an understanding with its critics. The deal has probably come as a major disappointment to those worried about the future of the agriculture industry.
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