October 23, 2016
by Simon Casey
Monsanto Co. talked to three other companies about potential transactions in the months leading up to its agreement to be acquired by Bayer AG for $65.7 billion, the largest-ever agricultural takeover.
Details of the talks were revealed in the seed company’s proxy statement filed Wednesday. While talks with Germany’s BASF SE about a possible combination of their respective petrochemicals businesses were previously reported, the involvement of two other parties illustrates for the first time the full scale of merger discussions involving Monsanto this year.
. While talks with Germany’s BASF SE about a possible combination of their respective petrochemicals businesses were previously reported, the involvement of two other parties illustrates for the first time the full scale of merger discussions involving Monsanto this year. (Photo: mindscanner/Thinkstock)
Monsanto agreed in September to an all-cash offer from Bayer, a deal that will create the world’s largest producer of pesticides and genetically modified seeds. It’s the latest in a series of proposed major transactions that would consolidate the industry, while sparking regulatory concerns: China National Chemical Corp. plans to buy Syngenta AG, and DuPont Co. and Dow Chemical Co. are seeking to combine and then carve out a new crop-science unit.
The prelude to the Bayer deal was Monsanto’s aborted attempt last year to buy Syngenta. Three months later, on Dec. 11, Dow and DuPont announced their merger. On Dec. 17, according to the statement, Hugh Grant, Monsanto’s chief executive officer, met with the CEO of a company active in agriculture Monsanto identifies only as "Company A" to talk about potential transactions.
Grant had a similar meeting with the CEO of "Company B" in March. In April, Grant said in an earnings call that the company no longer saw large-scale M&A as a strategy, but would pursue small acquisitions and partnerships.
It was only after May 10, when Bayer’s new CEO Werner Baumann met with Monsanto executives and proposed a $122-a-share, all cash offer, that those two companies started talking about a combination. Monsanto talked to "Company C" in June about a potential transaction, but the discussions with Bayer, which stretched into September, ultimately prevailed, with Monsanto agreeing to an improved offer of $128 a share.
According to the filing, Monsanto will pay Morgan Stanley $120 million should the deal be completed, for advising the company and performing financial analyses.
A spokesman for St. Louis-based Monsanto said the company had no further comment beyond the statement.
--With assistance from Lydia Mulvany. To contact the reporter on this story: Simon Casey in New York at [email protected]
To contact the editors responsible for this story: Simon Casey at [email protected]
© 2016 Bloomberg L.P
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