NEW YORK: Monsanto Co has rejected Bayer AG’s US$62 billion takeover bid, calling it “incomplete and financially inadequate.”
However, the seed company on Tuesday suggested that a higher bid might be accepted, saying that it remained open to talks. Bayer replied it is committed to completing the deal.
Monsanto chairman and chief executive officer Hugh Grant also said in a written statement that the initial offer failed to address potential financing and regulatory risks.
Bayer, a German drug and chemicals company, made an all-cash bid that valued Monsanto’s stock at US$122 each. The company previously said that it planned to finance the acquisition with a combination of debt and equity, the latter to be raised largely by issuing new shares.
Late on Tuesday, it said that it is confident it can address any potential financing or regulatory issues related to the proposed deal.
A combination of the two businesses would create a giant seed and farm chemical company with a strong presence in the US, Europe and Asia.
After last year’s blistering global buyout pace, this year is shaping up to be a sequel. There has been more than US$494 billion in global deals already this year, the third highest of all time.
The same drivers from last year exist this year. Mergers beget mergers, so when two companies in a sector combine, their competitors seek to do the same in order to compete.
Low interest rates that make borrowing cheap, huge stockpiles of cash held by corporations and a lackluster environment for organic growth continues to push global mergers.
