Once rejecting Bayer AG's proposal of a merger, Monsanto has agreed to a coupling with the German chemical company.
Bayer AG, which is based in Leverkusen, Germany, will acquire St. Louis-based Monsanto for $66 billion in cash, pending regulatory review, the company's said in a joint statement. It is the latest in a rush of chemical company mergers that includes a $130 billion merger between Dow and DuPont that was announced in December. That merger was followed by a $43 billion buyout of Syngenta by the China National Chemical Corp. (ChemChina).The mergers, according to Reuters, are taking place as companies scramble for position in a burgeoning global agricultural market. The deal is expected to receive intense regulatory scrutiny as lawmakers voice concerns over antitrust issues and the rising cost of food for consumers.
Monsanto, which manufactures Roundup for The Scotts Co., rejected Bayer's initial takeover bid in May, with Monsanto board members calling the $62 billion offer financially inadequate.
There could be even more mergers coming, with Monday's announcement of a planned merger between Agrium Inc. and Potash Corp of Saskatchewan, both of Canada.
Monsanto has long been considered a coup for any chemical company in a takeover bid because of its presence in the ag seed market. Monsanto is the world's largest seed producer and a leader in genetically modified foods and seeds. Bayer AG, whose subsidiaries include Bayer Environmental Science, makes a host of products for the healthcare, agriculture and chemical industries.
Once the deal has passed regulatory review, the combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St. Louis, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, as well as its presence in the Research Triangle Park area of North Carolina, according to Bayer.
Nothing is certain in a merger of this size, especially in an election year, analysts say. According to Bloomberg news, mergers valued at more than $10 billion have a 1 in 3 chance of being rejected. To that end, the Dow-DuPont merger has hit several roadblocks since European Union regulators opened a full investigation into the merger in August. The latest delay was announced Sept. 11, leaving both firms to conclude the merger will not be approved, if at all, until 2017.
If Bayer-Monsanto deal is not approved, Monsanto will be owed a $2 billion breakup fee by Bayer.