German chemical and healthcare giant to announce $66 billion acquisition

German chemicals and healthcare giant Bayer AG is expected to announce the acquisition of U.S. seeds company Monsanto Co. later in the day, before the New York Stock exchange opens.

The acquisition deal is expected to be valued at more than $66 billion. The potential deal has been recorded the largest cash acquisition proposal in the history of global mergers and acquisitions.

 Salient Features of the Deal -

•  Nature of the Deal: Acquisition
• Acquirer: Bayer AG
• Target: Monsanto Co.
• Expected Deal Value: $66 billion
• Type of Deal: Cash
• Expected Deal Offer : $127.50 - $130.0 per share to Monsanto shareholders

 Rationale behind Acquisition:

• Market Position: The deal shall give Bayer AG the financial impetus and technical knowhow to become the market leader in the US farm supplies industry, which has been witnessing a consolidation trend in recent times.

• Business Synergies: Bayer can leverage operational synergies by combining its crop science business with Monsanto Co’s expertise in seeds.

Reports on the Deal Negotiations:

• The deadlock in negotiations that lasted over four months was broken after Bayer further improved on the sweetened offer of $127.50 per share it disclosed last week, the sources said. 

• The deal will still value Monsanto at less than $130 per share, which the company was previously hoping to fetch, the sources added. 

Once St. Louis, Missouri-based Monsanto's board of directors approves the deal on September 12, Leverkusen-based Bayer's supervisory board will meet on September 13 to also authorize the transaction, with an announcement expected before the stock market opens in New York on Wednesday, sources said. 

However financial analyst cautioned that it is still possible the board of either company could decide to walk away from the deal at the last minute.