Bayer’s $66 billion Acquisition of Monsanto

 

Overview of the deal

  • Acquirer: Bayer

  • Target: Monsanto

  • Estimated value: $66 billion

  • Announcement date: May 2016

  • Acquirer Advisors: Credit Suisse, BofA Merrill Lynch, Rothschild

  • Target Advisors: Morgan Stanley, Ducera Partners


The deal fundamentally changes Bayer’s business, because its Agribusiness will replace healthcare as its biggest revenue earner. But Monsanto’s focus on genetically modified crops has put the deal under scrutiny in Europe, where such crops are viewed with deep suspicion. However, in mid-March 2018 the EU competition regulator approved Bayer’s $66 billion takeover, after Bayer agreed to sell vegetable seeds, pesticides and digital agriculture technology to BASF SE. This required selloff was to ensure that farmers will still have the choice of different seed varieties and pesticides at affordable prices.


Through this acquisition, Bayer gets access to, in the words of Bloomberg, “more than 2,000 varieties of seeds for crops such as corn, soybeans, and wheat.” Bayer had already developed seeds for rice, cotton, and oilseed. It will now expand its varieties significantly due to the acquisition. It will also be the largest all-cash transaction on record, ahead of brewer InBev's $60.4 billion offer for Anheuser-Busch in 2008.

"We have approved Bayer's plans to take over Monsanto because the parties' remedies, worth well over €6 billion, meet our competition concerns in full. Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger. -European Commision

Company details (Bayer Corporation)

Bayer Corporation, together with its subsidiaries, manufactures health care products, agriculture products, and high-tech polymer materials. Its health care products include animal health products, pharmaceuticals, consumer care products, and diabetes care products.


- Founded in 1863, headquartered in Leverkusen

- President and CEO: Werner Baumann

- Number of employees: 99,820

- Market Cap: $77.52bn - EV: $82.78bn

- LTM Revenue: $35.02bn - LTM EBITDA: $8.99bn

- LTM EV/Revenue: 2.36x - LTM EV/EBITDA: 9.21x

Company details (Monsanto)

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers worldwide. It operates in two segments, Seeds and Genomics, and Agricultural Productivity.


- Founded in 1901, headquartered in St. Louis

- CEO: Hugh Grant

- Number of employees: 24,100

- Market Cap: $52.46bn - EV: $57.25bn

- LTM Revenue: $14.65bn - LTM EBITDA: $4.14bn

- LTM EV/Revenue: 3.91x - LTM EV/EBITDA: 13.83x