On Monday, Bayer AG gave details on its current offer to buy evil corporation, Monsanto Co. for $62 billion. This would create the world’s largest seed and pesticide business. Quite frankly I’m not sure how this is potentially even legal. When this story first came out the purchase price was for far less and it seemed to be just a possibility.
But, on May 10th, Bayer released a letter to Monsanto Chief Executive Hugh Grant outlining plans to combine Monsanto’s No. 1 position in seeds and crop genetics with the German company’s vast experience in pesticides to create a truly terrifying monster.
Bayer’s Chief Executive Werner Baumann, told reports on Monday that the deal, “…represents a compelling opportunity for Monsanto’s shareholders.” It would certainly provide them with “immediate and certain value,” he added.
By outlining the offer terms publicly to investors, which is a move called a “bear hug”, they are able to pressure a company’s board of directors to negotiate a deal. Their move put Monsanto shares at 37% over its closing share price on May 9, the day before Bayer sent their written proposal. If anyone ever wondered if this was about food for the world’s, this should have cleared that up for you. And before anyone thinks it, I do understand that companies need to make money, but what may potentially happen here is dangerous. What prevents them from creating issues that they can then solve, with their own drugs?
From the Wall Street Journal article:
“It’s a very good initial bid for the company,” said James Zoldy, president of Halsey Associates Inc., a New Haven, Conn.-based firm that owns Monsanto shares. “We think there is some upside from that, and it’s going to have to be finessed by the [Monsanto] board to extract additional value.” He said that Monsanto’s board will have to be careful not to drive too hard a bargain, given there are few other potential suitors for the company.”
As Syngenta AG, Dow Chemical Co., and DuPont Co. have all shown interest in recent months, Bayer outlined its merger proposal rather quickly. You can bet we will continue to watch this story unfold.
Source: The Wall Street Journal
