Bayer to close deal Thursday, drop Monsanto name
June 5, 2018
Bayer AG, the German health care and agriculture company, plans to complete the acquisition of Monsanto on Thursday and to drop that company's name, which has been synonymous with controversial genetic modification.
"The acquisition of Monsanto is a strategic milestone in strengthening our portfolio of leading businesses in health and nutrition," Bayer Board Chairman Werner Baumann said in a news release.
"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,"
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.
That corresponds to a total cost of approximately $63 billion, taking into account Monsanto's debt outstanding as of Feb. 28. In connection with the comprehensive regulatory approval process, 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.
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 45 billion euros including combined crop science sales of around 20 billion euros.
Recommended Stories For You
Both companies together employed approximately 115,000 people last year, accounting for the divestments.
"The acquisition is anticipated to generate significant value," Bayer said. The company "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 will become the sole shareholder of Monsanto on June 7," the company said.
Bayer said that according to the conditional approval from the Justice Department, the integration of Monsanto "can take place as soon as the divestments to BASF have been completed, 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," Baumann said.
While Monsanto will no longer be a company name, Monsanto's acquired products will retain their brand names and become part of the Bayer portfolio.
The acquisition and end of Monsanto, a revered but controversial American company, have already been subject to substantial international press coverage.