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Bayer's Monsanto Bid for Massive Merger Has Some Investors Skeptical

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By    |   Monday, 23 May 2016 12:57 PM

Bayer's $62 billion bid for Monsanto, announced Monday, could make it the world's biggest seller of seeds and farm chemicals, but investors appeared skeptical about the deal.

According to Bloomberg, Germany-based Bayer said would pay $122 a share in cash to acquire Missouri-based Monsanto, but its stock dropped six percent upon the announcement. Monsanto shares, on the other hand, showed a 4.9 percent gain to $106.45 in New York trading.

"I don't think Monsanto will accept [Bayer's bid]," Andrea Williams, a fund manager at Royal London Asset Management Co., told Bloomberg. "The danger is that you start then having discussions about how you are going to fund a higher offer, because they are already stretching the balance sheet."
 
Bayer trumpeted the bid on its website Monday, stating that it would "create a leading integrated agriculture platform with a broad product portfolio."

"This transaction would create a leading integrated agriculture platform with a broad product portfolio," stated Bayer. "The combined business would benefit from a combined [research and development] pipeline that would deliver valuable and innovative solutions for farmers, with a focus on long-term investments to help advance the next generation of farming."

Bayer called Monsanto "a perfect match" for its agricultural business. Monsanto produces agricultural products and has some of the leading seed brands in crops like corn, cotton, oilseeds, fruits, and vegetables, noted its website.

"We at Bayer have a leading position in crop protection," Bayer said its statement. "Monsanto is extremely strong in seeds and traits. So jointly we would be an innovation powerhouse to address farmers' future needs. This is particularly exciting in advancing digital farming."

"The proposed acquisition of Monsanto is strategically compelling and completely logical. It would create value for shareholders, customers and employees of both companies alike," Bayer continued.

Reuters reported that the unsolicited bid comes three weeks after Werner Baumann took over as Bayer's chief executive officer. The bid was also slammed by a major Bayer shareholder as "arrogant empire-building" last week when the news first broke.

"We fully expect a positive answer of the Monsanto board of directors," Baumann said in a conference call, according to Reuters.

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Bayer's $62 billion bid for Monsanto, announced Monday, could make it the world's biggest seller of seeds and farm chemicals, but investors appeared skeptical about the deal.
bayer, monsanto
356
2016-57-23
Monday, 23 May 2016 12:57 PM
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