Companies plan to complete acquisition on June 7
Bayer plans to complete the acquisition of Monsanto and become its sole shareholder on June 7, after the receipt of all required approvals from regulatory authorities.
According to the conditional approval from the United States Department of Justice, the integration of Monsanto into Bayer can take place as soon as the divestments to BASF have been completed. This is expected to be in approximately two months.
“We have diligently prepared for the upcoming integration over the past two years. Our extensive experience in integrating other large companies has proven that we can and will be successful,” said Baumann.
Bayer will remain the company name. Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio.
“The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition. We will double the size of our agriculture business and create a leading innovation engine in agriculture, positioning us to better serve our customers and unlock the long-term growth potential in the sector,” said Werner Baumann, chairman of the board of management of Bayer AG.
Bayer announced its intention to acquire Monsanto in May 2016 and signed an agreement with the U.S. company for $128 per share in September 2016. Currently that corresponds to a total cost of approximately $63 billion taking into account Monsanto’s debt outstanding as of February 28, 2018. In connection with the comprehensive regulatory approval process, Bayer has agreed to the divestiture of businesses which generated EUR2.2 billion (US$2.6 billion) in sales in 2017 for an aggregate base purchase price of EUR7.6 billion (US$8.9 billion). Including Monsanto and taking the divestitures into account, the health and agriculture businesses would have been roughly equal in size in 2017, with total pro forma sales of around EUR45 billion (US$52.5 billion) including combined Crop Science sales of around EUR20 billion (US$23.3 billion). In 2017, both companies together employed approximately 115,000 people, accounting for the divestments.
The acquisition is anticipated to generate significant value. Bayer expects a positive contribution to core earnings per share starting in 2019. From 2021 onward, that contribution is expected to be double-digit percentage. Moreover, adjusted for divestments, Bayer expects synergies to deliver annual contributions of $1.2 billion to EBITDA before special items as of 2022.
In order to acquire Monsanto, Bayer secured initial bridge financing of $57 billion. As announced in September 2016, this is being refinanced by a combination of equity and debt transactions, some of which have already been completed. The final equity measure will be a rights issue.