German pharmaceutical company Bayer has announced its intention to acquire the US-based agribusiness company Monsanto in a $66 billion deal. Best known for the discovery of aspirin, Bayer’s acquisition of Monsanto would make it the world’s largest seed and crop spray supplier.
After four months of negotiations, the companies have agreed upon an all-cash deal valuing Monsanto’s shares at $128 apiece. Hugh Grant, CEO of Monsanto will reportedly earn over $135 million if the sale goes through.
“Today’s announcement is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto,” said Grant. “We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration.”
Despite mutual agreement between the two companies, the merger will now face the scrutiny of US regulators. Following last year’s merger between Dow Chemical and DuPont, and this year’s deal between ChemChina and Syngenta, the number of global companies in agribusiness is quickly shrinking.
Industry experts are pointing to bumper harvests and declining crop prices as a main driver of consolidation in the agricultural industry. According to farmer’s groups, this reduction in the number of different companies investing in new agricultural technologies could drive up the cost of proprietary seeds and chemical sprays.
If they’re successful, the Bayer-Monsanto merger will be the largest cash only deal on record, as well as the biggest acquisition of an American company by an overseas business. To complete the deal, Bayer will need to secure the approval of regulators in the US, Canada, the EU and Brazil.
“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less,” said Grant. “This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow. Together Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers.”