Monsanto Company (MON)  

​Bayer Clinches Monsanto Deal With $66 Billion Offer


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Jack Duffy | FlashRatings | Wednesday, September 14, 2016 1:57 PM EDT
Bayer, the German drug and chemicals giant, clinched a $66 billion takeover of Monsanto (MON) on Wednesday, paying $128-per-share for the U.S. seeds company in an all-cash transaction.
 
The deal will give the combined company more than a quarter of the world market for seeds and pesticides but will also face some stiff regulatory hurdles, according to analysts.

Bernstein Research analysts said in a research note on Tuesday that they saw only a 50% chance of the deal wining regulatory clearance.
“We believe political pushback to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes, to dissatisfaction with Monsanto leaving the United States, could provide significant delays and complications,” the Bernstein analysts said.

The deal includes a $2 billion breakup fee that Bayer will pay to Monsanto if regulators fail to approve the transaction.

Overall, five analysts have issued ratings on MON over the past 30 days, 80% of them positive with a medium price target of $120, which marks a 12% upside to the current stock price.

Some analysts also criticized Bayer (BAYRY) for paying too much for Monsanto. Jacob Thrane of  Baader Helvea Equity Research, told Reuters that the German company was paying 16.1 times Monsanto’s forecast for core earnings in 2017, more than the 15.5 times that ChemChina agreed to pay last year for the Swiss crop chemicals company Syngenta. Thrane has a “sell” rating on Bayer.

Bayer shares closed 0.3% higher at 93.55 euros on Wednesday, while Monsanto was 1.5% higher at $107.58 in midday U.S. trading.