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Bayer confirms $66bn Monsanto takeover | |
(about 1 hour later) | |
German chemicals giant Bayer has confirmed its record-breaking $66bn takeover of GM seeds business Monsanto - a deal that would create the world's biggest seeds and pesticides company. | |
The offer, a record cash takeover, values Monsanto shares at $128 and will create a company worth $66bn (£50bn). | |
As well as farm-products, Bayer also sells healthcare products including Alka-Seltzer. | As well as farm-products, Bayer also sells healthcare products including Alka-Seltzer. |
Monsanto is known for its genetically modified seeds for crops. | |
The use of such seeds is widespread in the US, but plans to introduce these into Europe have prompted fierce protests by environmental activists. | |
Bayer said feeding the world's population, which is expected to rise by around a third by 2050, was a massive challenge. | |
Werner Baumann, chief executive of Bayer, said the takeover would bring benefits across the board and deliver "substantial value to shareholders, our customers, employees and society at large". | |
Fight back | |
The tie-up, which will give the new company control of more than 25% of the world's supply of seeds and pesticides, comes amid a wave of mergers in the agriculture sector. | |
Falling crop prices have seen farmers cutting back on buying seeds and agricultural chemicals, such as herbicides and pesticides, leading to lower profits for suppliers. | |
The industry has been fighting back in order to save business costs. | |
Rivals including Dow Chemical, DuPont and Syngenta have all announced tie-ups recently, although some have yet to be cleared by regulators. | Rivals including Dow Chemical, DuPont and Syngenta have all announced tie-ups recently, although some have yet to be cleared by regulators. |
Bayer's takeover of Monsanto is likely itself to attract close scrutiny from anti-competition regulators because of the sheer size of the combined company and the control it would have over the global seeds and sprays markets. | |
'Frankenstein' | |
Farming groups have raised concerns that such mergers could lead to fewer choices and higher prices. | |
Professor John Colley of Warwick Business School said: "Bayer's acquisition of 'Frankenstein' crop producer Monsanto could be a horror story for both Bayer and its customers: the farmers." | |
He said there were a number of worrying issues: "The farmers will lose out as product ranges are rationalised and attempts are made to increase prices. | |
"Clearly Bayer will realise cost savings from the acquisition, but they have had to pay an enormous price for Monsanto at a 45% premium to the previously undisturbed share price." | |
There is a $2bn break fee if the deal does not complete. | There is a $2bn break fee if the deal does not complete. |
Bayer shares are 3% higher in Frankfurt. Monsanto shares were up 1.6% ahead of the US market open. |