Monsanto Rejects Bid

More Negotiation Necessary

Pam Smith
By  Pam Smith , Crops Technology Editor
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Further consolidation talks within the seed and chemical industry have Bayer courting Monsanto. DeKalb is one of Monsanto's seed brands. (DTN photo by Pamela Smith)

DECATUR, Ill. (DTN) -- Monsanto has rejected an acquisition proposal from Bayer AG. The St. Louis-based company stated in a news release on Tuesday that its Board of Directors unanimously viewed the $62 billion cash offer as incomplete and financially inadequate.

However, the statement also indicated the company is "open to continued and constructive conversations to assess whether a transaction in the best interest of Monsanto shareowners can be achieved."

Sara Miller, Monsanto global communication lead, told DTN the company would have no further comment beyond the press release at this time. DTN communications with Germany-based Bayer indicated the company is still preparing comments.

In a prepared statement Monsanto said it would not rule out a deal. "We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer's business," said Monsanto Chairman and CEO Hugh Grant. "However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition."

The Bayer $122-a-share bid valued Monsanto at 37% over its closing share price of $89.03 on May 9, the day before Bayer made a written proposal to the U.S. company.

The Monsanto news release also stated there is no assurance that any transaction will be entered into or consummated, or on what terms. Monsanto made several failed attempts to bring Syngenta into a relationship last year. It was the first of several indications that the world's largest seed and chem players were courting.

Dow Chemical and DuPont have agreed to a merger that would form a combined company valued at roughly $103 billion. Chinese state-owned China National Chemical Corp. and Syngenta agreed to a cash purchase price of $43 billion earlier this year. All of these transactions are still pending regulatory approvals.

Bayer went on the offense Monday in a media conference, discussing how they see the marriage working and touting the benefits of the union with Monsanto. Under the proposed transaction, the plan was to leave the global Seeds & Traits and North American commercial headquarters in St. Louis.

Liam Condon, head of Bayer's crop science division, acknowledged during the media call that the potential tie-up could possibly require some divestitures, but said it was too early to speculate on what those might be. The two companies overlap mostly in cotton and vegetables on the seed side. How Bayer's LibertyLink trait technology and glufosinate herbicide business would fit with Monsanto's Roundup Ready trait system and new dicamba herbicide traits is another question.

Pamela Smith can be reached at Pamela.smith@dtn.com

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(CZ)

Pam Smith