Monsanto rejects $62B takeover bid from Bayer AG as 'inadequate'

By Doug G. Ware  |  May 24, 2016 at 4:03 PM
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CREVE COEUR, Mo., May 24 (UPI) -- Biotechnology company Monsanto announced Tuesday that it has refused a $62 billion takeover offer from pharmaceutical giant Bayer AG as "incomplete" and "inadequate."

Monsanto has been open to a corporate takeover to help resolve some financial concerns, but said it considers the Germany-based pharmaceutical giant's latest offer too low.

"We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer's business," Monsanto Chairman and CEO Hugh Grant acknowledged in a news release. "However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition."

Bayer's offer for $122 per Monsanto share was made May 10 and represented a nearly 40 percent increase of the company's stock price. If successful, a merger would create the world's largest supplier of farm chemicals and seeds, Bloomberg reported.

Video courtesy Bayer TV International

"At Bayer, we are passionate about tackling large societal challenges through innovation, science and with responsibility," Bayer CEO Werner Baumann said in a video posted Tuesday. "The planned combination with Monsanto is such an extraordinary opportunity to create a global leader in the agricultural industry."

Monsanto had previously tried to acquire Syngenta AG in August with a $43.7 billion offer before the Swiss pesticide maker refused to complete the deal. In February, China National Chemical Corp. agreed to buy Syngenta for roughly the same amount.

Despite its status as a seed-maker, Missouri-based Monsanto has been trying to shore up some problems recently. The company has slashed its earnings forecast, clashed with some commodity-trading companies and became locked in disputes with the governments of Argentina and India.

Bayer had said the combined company would generate synergies of $1.5 billion over three years, and said it would finance the transaction with debt and equity. Bayer's debt doubled from 2011 to 2015 as it acquired an assortment of companies.

Monsanto said it is "open to continued and constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved." Analysts believe the German company will respond with a better offer.

"There is no assurance that any transaction will be entered into or consummated, or on what terms," the company said in a statement. "The Monsanto Board of Directors has not set a timeline for further discussions and Monsanto does not intend to make further comment at this time."

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