Bayer (BAYRY) Raises Offer To Buy Monsanto To $125/Share

It seems that German-based Bayer AG (DE:BAYGN) (OTC:BAYRY) won’t let go U.S.-based Monsanto Company (NYSE:MON) that easily in its attempt to create a global leader in agriculture. Bayer announced that it has upped its all-cash offer to Monsanto shareholders from $122 per share to $125 per share. Bayer said that though the offer was verbally made to Monsanto on Jul 1, it was formally submitted to the latter on Jul 9.

Bayer’s revised offer represents a premium of 40% over Monsanto’s closing share price on May 9, 2016. Bayer said that its increased offer has addressed Monsanto’s questions regarding financing and regulatory matters. It further stated that it was willing to make certain commitments to regulators to complete the deal.

BAYER A G -ADR Price

BAYER A G -ADR Price | BAYER A G -ADR Quote

Bayer has also added a reverse antitrust break fee of $1.5 billion. The company confirmed that its offer provides transaction certainty and is not subject to a financing condition. The company believes in its ability to gain all essential regulatory approvals in a timely manner given complementary geographic and product portfolios.

Monsanto said that it would comment only after its board of directors complete the review of Bayer’s latest proposal. Monsanto's shares were up 3.1% on the news.

MONSANTO CO-NEW Price

MONSANTO CO-NEW Price | MONSANTO CO-NEW Quote

We note that Monsanto had rejected the initial offer of $122 per share in May 2016 citing that the offer significantly undervalued the company. However, the company was open to more talks.

As per a Bloomberg report, Monsanto is exploring an alternative transaction. The company is looking into the possibility of acquiring the German chemical company BASF SE’s (OTC:BASFY) agriculture-solutions unit.

We expect investor focus to remain on updates from the Bayer-Monsanto transaction, going ahead.

While Bayer is a Zacks Rank #3 (Hold) stock, Monsanto carries a Zacks Rank #5 (Strong Sell). Innoviva, Inc. (NASDAQ:INVA) is a better-ranked stock in the health care sector sporting a Zacks Rank #1 (Strong Buy).