Bayer AG (ADR) (OTCMKTS:BAYRY)’s $62 billion, all cash, bid to acquire Monsanto Co. has been rejected, by the Monsanto’s management, but further talks are underway. The details of the deal have only recently surfaced, even though an acquisition had been rumored for almost a month. However, due to the intense denial of both parties to comment on the matter, the deal has come under severe scrutiny from investors. It should be noted here Monsanto Co. is the world’s largest seed company and Bayer’s offer is the largest corporate takeover offer, on record.
Added to the investor scrutiny, the deal would also need a total of four major approvals, before moving forward. First Monsanto shareholders would have to approve the merger, followed by a Hart-Scott-Rodino antitrust approval. Furthermore, approvals would also be required from the Committee for Foreign Investment in the US and as well as several foreign antitrust approvals. Obtaining these approvals could prove to be difficult for the two companies, given that two of their businesses overlap.
Bayer has also disclosed that it would be financing only 25% of the deal, through a rights offering, which would dilute existing shareholders. However, given the growing investor scrutiny and the shareholder feedback, received by Bayer, it seems that the company would not be able to raise much more cash, than its current offer.
There have also been reports that Bayer might raise as much as $40 billion, in short-term bridge financing, from banks. Sources close to the matter have stated that the company is close to choosing the banks for the financing. The sources also stated that the company is considering obtaining a loan from almost six banks, out of the ones it has interviewed at its headquarters, in Leverkusen. However, the amount is not yet final and the figures could change, if the banks allow Bayer to have extra room for further negotiations.
Bayer AG (ADR) (OTCMKTS:BAYRY) experienced a trade volume of 292,931, during the May 27 trading session and lost 1.23%, to reach a close at $95.22 per share.