Wired News – The Bayer and Monsanto Deal Moves Closer to Fruition as CIFUS Clears the Proposed Merger

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LONDON, UK / ACCESSWIRE / December 04, 2017 / Active-Investors issued a free report on Monsanto Co. (NYSE: MON), which is readily accessible upon registration at www.active-investors.com/registration-sg/?symbol=MON as the Company's latest news hit the wire. Saint Louis, Missouri based Monsanto announced on December 01, 2017, that the Committee on Foreign Investment in the United States (CFIUS) has completed the review of the proposed takeover of the Company by Bayer AG, the German drug and agrochemicals major. Sign up now for our free research reports at:

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CFIUS has given its clearance for the Bayer-Monsanto deal after a comprehensive review. According to CFIUS the proposed Bayer-Monsanto deal does not have any "unresolved national security concerns". The current clearance from CFIUS is part of the regulatory approvals required for the completion of the takeover of the Company by Bayer AG. Having cleared this hurdle, both Companies have assured that they will continue cooperating with the relevant authorities to ensure that the deal reached fruition in early 2018.

History of Bayer-Monsanto deal

Bayer has first offered to acquire Monsanto in May 2016 for $122 for each of Monsanto's share. This offer was revised in July 2016 to $125 for each of Monsanto's share, which Monsanto rejected. Monsanto's major concern was the financing of the transaction as well as the tough regulatory scrutiny that the deal would invite. Bayer had assured Monsanto of its ability to obtain all necessary regulatory approvals in a timely manner. To convince Monsanto of its commitment, Bayer had offered to pay $1.5 billion reverse antitrust termination fee. The negotiations between two Companies continued.

Finally, in September 2016, Monsanto's Board approved Bayer's offer of $128 for each of Monsanto's shares in an all-cash transaction valued approximately $66 billion. In this agreement, Bayer also increased the reverse antitrust termination fee to $2 billion. The Bayer-Monsanto merger would create one of the biggest agricultural Companies in the world. Bayer expected the deal to create annual synergies of approximately $1.5 billion after three years of completion of the deal. Bayer also expected the deal to be accretive to its EPS within the first year of closing the transaction and would rise to double digit accretion from the third full year of operation. Bayer had arranged for financing of the deal from five underwriter banks - BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC, and JP Morgan. The deal was approved by the shareholders of Monsanto in December 2016 after which the deal was expected to close by end of FY17.

Delays due to intense scrutiny by regulators

In August 2017, Bayer confirmed that the European Commission (EC) had imitated a review of the Bayer-Monsanto deal and had agreed to work closely with the EC to get its approval to complete the deal by end of 2017. The EC was worried about competition in various pesticide and seeds markets. The EC was worried that the deal might slow the race to develop new products and Bayer would become too dominant in combined offerings of seeds and pesticides with the help of digital farming tools such as connected sensors, software and precision machines. The EC is expected to give its decision on January 08, 2018.

In September 2017, Bayer indicated that the completion of the Bayer-Monsanto deal has been pushed to early 2018 from the earlier closing planned by end of FY17. It had requested the EC for an extension for completing the investigation by January 22, 2018. The EC had said that it would take a decision shortly.

To get the approval from antitrust regulators for the Bayer-Monsanto deal, Bayer sold off its Crop Science business to BASF in October 2017 for EUR 5.9 billion. Bayer's Crop Science business included the complete Company's field crop seeds businesses including the research and development capabilities. This included the global cotton seed business (excluding India and South Africa), the North American and European canola seed businesses and the soybean seed business. The transaction also included the transfer of relevant intellectual property and facilities, and nearly 1,800 employees in the United States, Germany, Brazil, Canada, and Belgium.

Bayer has submitted applications to around 30 relevant regulators for approval till September 2017 and, so far has already received approvals from over one-third of them. Bayer has been actively engaged in constructive talks with these regulatory bodies around the world for the successful closure of the Bayer-Monsanto merger.

Bayer now expects to close the acquisition of Monsanto by early 2018.

Stock Performance Snapshot

December 01, 2017 - At Friday's closing bell, Monsanto's stock slightly advanced 0.50%, ending the trading session at $118.93.

Volume traded for the day: 3.81 million shares, which was above the 3-month average volume of 2.28 million shares.

Stock performance in the last three-month – up 1.47%; previous six-month period – up 1.06%; past twelve-month period – up 14.91%; and year-to-date - up 13.04%

After last Friday's close, Monsanto's market cap was at $52.26 billion.

Price to Earnings (P/E) ratio was at 23.43.

The stock has a dividend yield of 1.82%.

The stock is part of the Basic Materials sector, categorized under the Agricultural Chemicals industry. This sector was up 0.5% at the end of the session.

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