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Bayer to close Monsanto deal this week, will drop Monsanto name

June 5, 2018
Energy & Chemical Value Chain

Bayer said today it will complete its $62.5-billion takeover of Monsanto on Thursday 7 June and will drop the Monsanto name in its future business.

The announcement follows receipt of all required approvals from regulatory authorities. The deal will complete just one week ahead of the 14 June deadline agreed by the companies, after which Monsanto would have been entitled to ask for it to be renegotiated. On Sunday, Bayer also launched a €6-billion ($7 billion) rights issue to help finance the transaction.

Bayer says this will be the largest acquisition in its history and will double the size of its agriculture-related business. “The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition. We will double the size of our agriculture business and create a leading innovation engine in agriculture, positioning us to better serve our customers and unlock the long-term growth potential in the sector,” said Werner Baumann, chairman of Bayer. After the antitrust-mandated divestments of various agricultural chemical, seeds, and related businesses to BASF, the combined group would have had pro forma sales of around €45 billion, including Crop Science sales of around €20 billion, in 2017.

Although Bayer will become the sole shareholder in Monsanto on 7 June, under the terms of the conditional approval from the US Justice Department, it will not be allowed to integrate its agricultural businesses with those of Monsanto until the divestments to BASF are complete. This is expected to take approximately two months.

In the rights issue announced yesterday, Bayer will issue 74,604,156 million new shares at a price of €81, a 22% discount to Friday’s closing price, to raise €6.04 billion before expenses. Each Bayer shareholder will be offered two new shares for every 23 shares held during an offer period starting 6 June and ending 15 June. At the end of the subscription period any unsubscribed shares will be subject to a private placement to institutional investors at a price at least equal to the subscription price. The company has also announced plans to raise €20 billion of dollar- and euro-denominated debt.

By Natasha Alperowicz

Source: Chemical Week

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