After months of courtship, German drug and farm chemical maker Bayer AG has finally reached an agreement to buy US seed and weedkiller company Monsanto, in a deal valued at $66 billion, the AP reports. In a statement Wednesday, Bayer said it's paying Monsanto shareholders $128 per share in cash, representing a 44% premium over Monsanto's closing price on May 9 (the day before a proposed deal was announced). The $66 billion figure put on the deal by Bayer includes net debt; the equity value is $57 billion, according to slides for an analyst conference call. Monsanto shareholders must approve the deal, expected to close by the end of next year. Anti-trust regulators are also expected to scrutinize the tie-up to determine whether the new business would gain a market-dominating position in any one part of their business. Bayer agreed to pay a $2 billion fee if the deal doesn't go through.
Bayer said the transaction brings together two different but complementary companies. Bayer makes a wide range of crop protection chemicals that kill weeds, bugs, and fungi, while Monsanto is known for its seeds business and the weedkiller glyphosate. Bayer said the merged companies' agriculture business would have its seeds business and North American business headquarters in St. Louis, where Monsanto is currently based. Bayer initially offered $122 per share, only to be rebuffed by Monsanto management, and then $125 per share before reaching the deal announced Wednesday. Monsanto Chairman and CEO Hugh Grant says the deal "represented the most compelling value for our shareholders, with the most certainty through the all-cash consideration." (An ex-coffee farmer is suing Monsanto for her cancer.)