MOSCOW (
MRC) -- Monsanto Co. rejected a USD62 billion takeover offer from Bayer AG as too low while saying it’s still open to further deal talks, putting pressure on the German company to raise a bid that has already sent its stock tumbling, said
Bloomberg.
Bayer’s USD122-a-share offer also doesn’t "adequately address or provide reassurance for some of the potential financing and regulatory execution risks" related to the deal, St. Louis-based Monsanto’s Chief Executive Officer Hugh Grant said Monday in a statement. Monsanto’s board was unanimous in its rejection of the bid, according to a person with knowledge of the matter.
Bayer will likely come back with a higher bid, Jonas Oxgaard, an analyst with Sanford C. Bernstein & Co. in New York, said Tuesday in a note, adding that an offer below USD135 per share would be “challenging” for Monsanto to agree to. Monsanto rose 3.1 percent to USD109.30 in New York.
Buying Monsanto would create the world’s biggest supplier of farm chemicals and seeds. Monsanto is the largest seed supplier and a pioneer of genetically modified crops, which two decades on from their introduction have come to account for the majority of corn and soybeans grown in the U.S. Monsanto also sells seeds in foreign markets including Latin America and India.
The offer from Bayer, which
was made May 10 in a letter to Monsanto, marks a reversal of roles for the U.S. company. Monsanto previously sought to buy Swiss pesticide maker Syngenta AG, abandoning the USD43.7 billion bid in August after the other company refused to agree to a deal.
Regulators are already examining the proposed USD130 billion Dow-DuPont tie-up while national security officials in the U.S. are weighing the ChemChina-Syngenta combination. U.S. senators said Monday they will pay Bayer’s proposed deal close scrutiny. The German company said it doesn’t see major regulatory risks.
Despite its preeminence in seeds, Monsanto has become vulnerable to a takeover as a number of problems piled up this year. The company has cut its earnings forecast, clashed with some of the world’s largest commodity-trading companies and become locked in disputes with the governments of Argentina and India.
MRC