Monsanto rejected Bayer AG $62 billion takeover offer as too low on Tuesday, saying the current proposal “significantly undervalues” the company and is “financially inadequate.” Monsanto also said the deal does not address certain risks related to a deal, including potential financing and regulatory hurdles. However, the biotech seed giant said it remained open to further discussion and Bayer AG said it remained commited to its pursuit of Monsanto.
Monsanto’s move puts pressure on the German pharmaceutical and chemical conglomerate to sweeten its offer despite protests from some of it investors, who said the offer was already a stretch for Bayer AG. Bayer AG stock has plummeted more than 12 percent since news of the takeover surfaced about two weeks ago.
“Bayer remains committed to working together to complete this mutually compelling transaction,” said Bayer CEO Werner Baumann earlier this week. Baumann, a 28-year Bayer veteran who stepped in as CEO just over three weeks ago, has been working to convince shareholders, who fear the deal would saddle the company with too much debt.
Analysts are also questioning how much Bayer AG could afford to raise its all-cash, $122-a-share bid. To seal the deal, which would create the world’s largest agrochemicals company, Bayer would need to craft a new bid high enough to satisfy Monsanto but not high enough to spook its own shareholders and investors, analysts said. Some analysts have said Bayer may need to raise its offer to at least $135 a share to keep Monsanto interested and must successfully persuade shareholder the deal makes sense and comes at the right price.
Bayer’s bid for Monsanto comes after major deals were struck in recent months by rival seed developers Syngenta AG, DowChemical Co., and DuPont Co. Analysts have concluded this would be Bayer’s last chance to participate in that deal-making frenzy.
