Bayer, Monsanto to Create a Global Leader in Agriculture

A shared vision of integrated agricultural offerings to deliver enhanced solutions for growers


Werner Baumann (left), CEO of Bayer AG, and Hugh Grant, Chairman and Chief Executive Officer of Monsanto.

Bayer (one of DiversityInc's 25 Noteworthy Companies) and Monsanto (No. 43 on the DiversityInc Top 50 Companies for Diversity list) announced September 14 that they signed a definitive merger agreement under which Bayer will acquire Monsanto for USD 128 per share in an all-cash transaction. Monsanto's Board of Directors, Bayer's Board of Management and Bayer's Supervisory Board have unanimously approved the agreement. Based on Monsanto's closing share price on May 9, 2016, the day before Bayer's first written proposal to Monsanto, the offer represents a premium of 44 percent to that price.

"We are pleased to announce the combination of our two great organizations. This represents a major step forward for our Crop Science business and reinforces Bayer's leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large," said Werner Baumann, CEO of Bayer AG.

"Today's announcement is a testament to everything we've achieved and the value that we have created for our stakeholders at Monsanto. We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration," said Hugh Grant, Chairman and Chief Executive Officer of Monsanto.

Enhanced Solutions for Growers

This transaction brings together two different, but highly complementary businesses. The combined business will benefit from Monsanto's leadership in Seeds & Traits and Climate Corporation platform along with Bayer's broad Crop Protection product line across a comprehensive range of indications and crops in all key geographies. As a result, growers will benefit from a broad set of solutions to meet their current and future needs, including enhanced solutions in seeds and traits, digital agriculture, and crop protection.

The combination also brings together both companies' leading innovation capabilities and R&D technology platforms, with an annual pro-forma R&D budget of approximately EUR 2.5 billion. Over the mid to long-term, the combined business will be able to accelerate innovation and provide customers with enhanced solutions and an optimized product suite based on analytical agronomic insight supported by Digital Farming applications. These are expected to result in significant and lasting benefits for farmers: from improved sourcing and increased convenience to higher yield, better environmental protection and sustainability.

"The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional 3 billion people in the world by 2050 in an environmentally sustainable way. It has been both companies' belief that this challenge requires a new approach that more systematically integrates expertise across Seeds, Traits and Crop Protection including Biologicals with a deep commitment to innovation and sustainable agriculture practices," said Liam Condon, member of the Board of Management of Bayer AG and head of the Crop Science Division.

"We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer's crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow. Together Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers," said Grant.

Value Creation

Pro forma sales of the combined agricultural business amounted to EUR 23 billion in calendar year 2015. The combined company will be well positioned to participate in the agricultural industry with significant long-term growth potential. Beyond the attractive long term value creation potential of the combination, Bayer expects the transaction to provide its shareholders with accretion to core EPS (earnings per share) in the first full year after closing and a double-digit percentage accretion in the third full year. Bayer has confirmed sales and cost synergies assumptions in due diligence and expects annual EBITDA contributions from total synergies of approximately USD 1.5 billion after year three, plus additional synergies from integrated solutions in future years.

Financing and Closing Conditions

Bayer intends to finance the transaction with a combination of debt and equity. The equity component of approximately USD 19 billion is expected to be raised through an issuance of mandatory convertible bonds and through a rights issue with subscription rights. Bridge financing for USD 57 billion is committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.

Bayer has a proven track record of disciplined deleveraging after large acquisitions and believes that the strong cash flows of the combined business will contribute to improving its financial profile. Bayer targets an investment grade credit rating post-closing and is committed to the single "A" credit rating category over the long-term.

The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals. Closing is expected by the end of 2017. The companies will work diligently with regulators to ensure a successful closing. In addition, Bayer has committed to a USD 2 billion reverse antitrust break fee, reaffirming its confidence that it will obtain the necessary regulatory approvals.

Headquarters and Employees

The combined agriculture business will have its global Seeds & Traits and North American commercial headquarters in St. Louis, Missouri, its global Crop Protection and overall Crop Science headquarters in Monheim, Germany, and an important presence in Durham, North Carolina, as well as many other locations throughout the U.S. and around the world. The Digital Farming activities for the combined business will be based in San Francisco, California.

"This combination is a great opportunity for employees, who will be at the forefront of innovation in our sector. This transaction also enhances Bayer's strong commitment to the U.S., building on our 150-year history with operations across 25 states employing more than 12,000 people in the country. I am convinced that Monsanto will flourish as part of one of the most respected and trusted companies in the world," said Baumann.

Bayer has extensive experience in successfully integrating acquisitions from a business, geographic and cultural perspective, and remains committed to its strong culture of innovation, sustainability and social responsibility.

Advisors to the Transaction

BofA Merrill Lynch and Credit Suisse are acting as lead financial advisors and structuring banks to Bayer in addition to providing committed financing for the transaction; Rothschild has been retained as an additional financial advisor to Bayer. Bayer's legal advisors are Sullivan & Cromwell LLP (M&A) and Allen & Overy LLP (Financing).

Morgan Stanley & Co. and Ducera Partners are acting as financial advisors, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Monsanto.

Note:

Further information is available on the internet at: www.advancingtogether.com

Bayer Issues New Bonds With a  Volume of 15 billion U.S. Dollars

Successful international placement secures long-term financing of the Monsanto acquisition / Issue of eight tranches with maturities of three to 30 years was approximately three times oversubscribed

Originally Published by Bayer.

Via its subsidiary, Bayer U.S. Finance II LLC, Pittsburgh, United States, the Bayer Group is issuing bonds with a volume of 15 billion U.S. dollars guaranteed by Bayer AG. The placement comprises eight tranches with differing maturities and exclusively targets international institutional investors. It was approximately three times oversubscribed and will secure the long-term financing of the Monsanto acquisition.

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Monsanto Company Awards $500,000 Grant to T-REX to Support New Resource Center for Geospatial Innovation

Currently more than 200 small companies and start-ups are housed at T-REX, which is also located about two miles away from the National Geospatial-Intelligence Agency construction site.

REUTERS

Originally Published by Monsanto.

In its continued support of geospatial innovation, Monsanto Company has awarded a $500,000 grant to T-REX, a St. Louis based non-profit business and technology incubator to support the creation of a new Geospatial Resource and Innovation Center.

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Bayer Closes Monsanto Acquisition

J.P. Morgan assisted Bayer with processing the purchase price payment for the largest acquisition in the company's history.

Originally Published by Bayer.

Bayer successfully completed the acquisition of Monsanto on Thursday. Shares in the U.S. company will no longer be traded on the New York Stock Exchange, with Bayer now the sole owner of Monsanto Company. Monsanto shareholders are being paid 128 U.S. dollars per share. 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 integration process is expected to commence in approximately two months.

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Monsanto and 2Blades Foundation Collaborate to Combat Devastating Soybean Disease


"Collaboration with industry is vital to ensure that new discoveries made in the lab can lead to innovations that will prevent crop losses caused by plant disease," said Dr. Peter van Esse, leader of the 2Blades Research Group at TSL.

REUTERS

Originally Published by Monsanto.

Monsanto Company and charitable organization 2Blades Foundation (2Blades) have formed a new collaboration to discover novel sources of genetic resistance to Asian soybean rust (ASR). 2Blades will deliver resistance genes in further collaboration with The Sainsbury Laboratory (TSL, Norwich, UK), the leading global institute for research on plant-pathogen interactions, and the Universidade Federal de Viçosa (UFV), a leading university in agricultural sciences in Brazil.

Asian soybean rust, a disease caused by the fungus Phakopsora pachyrhizi, results in yellowing and browning of soybean leaves and can lead to premature senesence and significant yield loss. According to the U.S. Department of Agriculture (USDA), P. pachyrhizi has spread rapidly and causes yield losses from 10 to 80% in Argentina, Asia, Brazil, Paraguay, South Africa, and Zimbabwe.1

"Asian soybean rust is an ugly and expensive disease that can devastate farmers' harvests," said Jeremy Williams, Monsanto's biotechnology and ag productivity innovation lead. "Current fungicide treatments can provide some control, but farmers need more tools – and the 2Blades research could help provide a durable solution as part of an integrated pest-management system."

2Blades' mission is to contribute to global food security by developing crops with long-lasting resistance to pathogens in order to reduce losses due to disease. By working with world-leading plant scientists, 2Blades seeks to discover new sources of disease resistance in nature and transfer them into important crops to extend the breadth of their immune system and secure yields.

"Collaboration with industry is vital to ensure that new discoveries made in the lab can lead to innovations that will prevent crop losses caused by plant disease," said Dr. Peter van Esse, leader of the 2Blades Research Group at TSL. "It is therefore exciting to see that our scientific expertise and knowledge on plant-microbe interactions will be combined with Monsanto's capacity to deliver solutions to farmers to tackle a key challenge in soybean cultivation."

"The management of soybean rust requires the integration of different approaches, including disease resistance. This collaboration will allow us to use cutting-edge technologies to speed up the identification of new resistance genes that can be used to deliver more sustainable solutions to soybean farmers, reducing the environmental and economic impact of ASR," said Prof. Sérgio H. Brommonschenkel at UFV.

In January 2017, Monsanto, 2Blades and The Sainsbury Laboratory announced a collaboration focused on tackling corn disease complexes such as stalk and ear rots that have the potential to significantly reduce yield. That research is ongoing and is independent of this new collaboration.

The ASR collaboration complements Monsanto's work to expand the global crop protection toolbox while enabling farmers to produce more with less of an impact on the environment. 2Blades retains rights to deploy new leads arising from the program in crops for smallholder farmers in the least developed countries, with a particular focus on sub-Saharan Africa. Soybean is a crop of significant and increasing importance in Africa, with extraordinary nutritional, soil, and economic benefits. However, the presence of ASR throughout the African continent is a major factor limiting production.

Monsanto: Mark Edge on WEMA, the Fall Armyworm and farmers in Africa

Mark Edge, Director of Collaborations for Developing Countries at Monsanto, talks about WEMA, the initiative that uses Bt maize to eradicate a harmful pest and help smallholder farmers in Africa.

REUTERS

By Mark Edge

Originally Published by Monsanto.

My work at Monsanto over the years has offered me many new challenges – lately I'm working with a team on the complex issue of helping smallholder farmers in Africa get better seed to help them manage the threats to their maize crops.

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