Speed Reads

Mergers and acquisitions

Bayer makes $62 billion cash offer for Monsanto

On Monday, Bayer AG formally unveiled a $62 billion offer for U.S. agribusiness giant Monsanto, offering a 37 percent premium over Monsanto's share price on May 9, the day before Bayer first disclosed its interest in the U.S. company. If completed, the all-cash deal would be the largest foreign acquisition by a German firm. "This transaction represents a compelling opportunity for Monsanto's shareholders," new Bayer CEO Werner Baumann argued in a conference call, providing investors "immediate and certain value." Bayer said it would finance the deal through selling shares and borrowing.

Bayer is better known as a pharmaceutical company, but it also makes pesticides, and buying Monsanto would makes its agricultural revenue roughly equal to its drug business, according to European investment bank Bryan Garner. Bayer focuses on agricultural chemicals, while Monsanto is best known for seeds. Not everyone approves of the proposed takeover, The Wall Street Journal notes. Some investors and analysts are worried that taking on so much debt would hurt Bayer's core pharmaceutical business, while others expressed concerns that buying Monsanto, the world's largest producer of genetically modified crops, would hurt Bayer's reputation, especially in anti-GMO Europe.