Monsanto, Bayer Seal The Mega-Seed Merger Deal For $66B

It turns out $65 billion wasn’t quite enough to push Monsanto into Bayer’s seed-loving arms. Instead, it took just $1 billion more: the Missouri-based seed giant agreed late Tuesday to sell itself to Bayer for $66 billion, officially creating the largest seed company in the world. 

Bayer announced Wednesday that the board of its company and Monsanto unanimously approved a definitive merger agreement with Monsanto that puts an end to a months-long back and forth between the two companies.

“This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven Life Science company with leadership positions in its core segments,” Werner Baumann, CEO of Bayer AG, said in a statement.

The agreement — which represents a $128/share all-cash offer, just $0.50 more per share than Bayer’s third offer for the company — isn’t exactly a done deal. It must still be approved by regulatory authorities. If for some reason the deal is rejected, Bayer has agreed to pay Monsanto a $2 billion break-up fee.

The mega-merger — which will make up one-fourth of the seed sector — won’t just create the largest seed company in the world, it will essentially redesign that industry, Bloomberg reports.

If the merger is approved, the number of players in the global seed market will shrink to only four. This sector has experienced consolidation in recent years following mergers of companies like DuPont and Dow, and Switzerland’s Syngenta (a former acquisition target of Monsanto’s) with China National Chemical.

With the purchase of Monsanto, Bayer will acquire 2,000 varieties of seeds for crops like corn, soybeans, and wheat. Previously, the company dabbled more in seeds for vegetables, rice, cotton, and oilseed, Bloomberg reports.

With a boosted portfolio, Bayer estimates it will be able to capture demand from farmers who seek to feed 10 billion people globally by 2050.

[via Bloomberg]

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