July 19, 2016 – U.S. seed company Monsanto Co turned down a sweetened US$64 billion acquisition offer from Bayer AG , but said it was open to further talks with the German healthcare and chemicals group as well as other parties.
The widely expected rejection puts pressure on Bayer to sweeten its offer once again, at least enough to get access to Monsanto’s books. The two companies have been in negotiations about a potential confidentiality agreement.
Monsanto said today its board unanimously viewed Bayer’s latest bid as “financially inadequate and insufficient to ensure deal certainty.”
“Monsanto remains open to continued and constructive conversations with Bayer and other parties to assess whether a transaction that the board believes is in the best interest of Monsanto share owners can be realized,” the company said.
Bayer said it was disappointed with Monsanto’s decision to reject its latest offer but was looking forward to continued dialogue with Monsanto under an appropriate confidentiality agreement that would allow access to additional information.
Access to confidential information has been a major sticking point in Bayer’s negotiations with Monsanto ever since the German company offered to acquire Monsanto in May.
Bayer disclosed Thursday that it had increased its bid by US$3 per share. Its latest US$125-per-share offer is the largest all-cash bid on record. Bayer also offered a US$1.5 billion reverse antitrust breakup fee, equivalent to about 2.3 percent of the deal’s value.
By comparison, the breakup fee ChemChina offered to acquire Swiss peer Syngenta should the deal not go through is US$3 billion, representing 7 percent of the US$43 billion transaction value.
Monsanto would like Bayer to sweeten its offer further, including increasing the breakup fee, before providing Bayer access to financial information, according to people familiar with the matter who asked not to be identified discussing private discussions.
Monsanto’s shares were up 0.35 percent to US$106.81, while Bayer shares were down 1.2 percent at 91.87 euros.
Bayer argued last week that it had comprehensively addressed Monsanto’s questions about financing and regulatory matters and said it was prepared to make certain commitments to regulators, if required, to complete a deal.