London/Berlin — Bayer is days away from a transformation into the world’s biggest maker of seeds and agricultural chemicals, saying it plans to close its purchase of Monsanto this week.
Once final regulatory approvals are in, the Leverkusen, Germany-based company plans to close the deal on Thursday while raising as much as €26bn in shares and bonds. Bayer will retain its name and drop Monsanto’s.
The purchase is part of a multiyear transformation, as Bayer sold off its legacy plastics business and remade itself into a life-science company with half its sales from health and half from agriculture.
It’s the third in a series of mega-deals in the industry, following Dow Chemical’s merger with DuPont and China National Chemical’s takeover of Syngenta.
"The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition," CEO Werner Baumann said in a statement on Monday.
Bayer shares rose 0.8% to €104.2 at 9.04am in Frankfurt. The shares have returned 3% this year, compared with a 0.6% loss in the benchmark DAX index.
Justice agreement
Bayer planned to raise €6bn in a rights offering and €20bn from bond sales, it said on Sunday. The total deal value of $63bn reflects Monsanto’s outstanding debt as of February 28.
Under the rights offering, existing shareholders would be able to buy two new shares for every 23 held at a price of €81, Bayer said. That’s a discount of about 22% to the German company’s June 1 closing price.
The offering has been underwritten by a group of 20 banks. Joint global co-ordinators are Bank of America Merrill Lynch and Credit Suisse. Bayer raised a $56.9bn loan in October 2016 to support the acquisition, the company said at the time.
To gain approval for the deal from the US Justice Department, Bayer agreed to sell assets to BASF. The divestiture package was worth about $9bn, the largest in a US merger-enforcement case, the government said.
Bloomberg
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