German chemical and pharma major BayerNSE -0.43 % AG today said it will complete the multi-billion dollar acquisition of US-based biotech major MonsantoNSE -0.31 % on June 7, following all regulatory approvals.
In India, both entities have presence in production and sale of vegetable seeds, cotton seeds as well as in production and sale of non-selective herbicides.
Bayer had announced its intention to acquire Monsanto in May 2016 and signed an agreement with the US company for USD 128 per share in September 2016. Currently, that corresponds to a total cost of about USD 63 billion taking into account Monsanto’s debt outstanding as of February 28, 2018.
Bayer has agreed to the divestiture of businesses which generated 2.2 billion euros in sales in 2017 for an aggregate base purchase price of 7.6 billion euros.
“Bayer will become the sole shareholder of Monsanto on June 7,” said Werner Baumann, Chairman of the board of management of Bayer AG in a statement.
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, he said.
“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,” Baumann said.
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.
In order to acquire Monsanto, Bayer said it secured initial bridge financing of USD 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, which was announced yesterday.
“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…,” Baumann added.
Stating that the acquisition is anticipated to generate significant value, Bayer said it expects a positive contribution to core earnings per share starting in 2019.
From 2021 onward, that contribution is expected to be in double-digit percentage. Moreover, adjusted for divestments, Bayer expects synergies to deliver annual contributions of USD 1.2 billion to EBITDA before special items as of 2022, it added.
