Bayer Increases Its Bid Price to Acquire Monsanto



Bayer further increases its bid price to acquire Monsanto

On September 6, Bayer increased its bid price to acquire Monsanto (MON) to $127.50 per share, which is a 2% increase over its previous offer of $125 per share in July. Earlier in May, Bayer had offered $122 per share. Monsanto confirmed that it has received an updated bid from Bayer and is engaged in constructive negotiations. Monsanto has rejected both the offers of $122 and $125. There are rumors that Monsanto expected $135 per share. However, Wall Street is of the opinion that the deal might be settled at $130 per share. Bayer’s offer implies a 19.6% premium over Monsanto’s closing price of $106.57 on September 6.

In its latest investor presentation, Bayer has discussed how Monsanto would strategically fit into its life science business provided that the merger deal goes through.

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Monsanto’s stock price

On September 9, 2016, Monsanto closed at $106.78, down 0.6% for the week. The sell-off on September 9 pushed the stock price down, erasing the gains it had in the middle of the week. The Materials Select Sector SPDR ETF (XLB), which holds 8.4% in Monsanto as of September 9, dropped 3.7% for the week and closed at $47.44. Monsanto’s peer Potash (POT) lost 5.7%, Dow Chemical (DOW) dropped 1.4%, and DuPont (DD) went down by 2.4% for the same period. Monsanto’s stock price closed 3.1% higher than the 100-day moving average price of $103.54, indicating an upward trend in the stock. Analysts expect Monsanto’s 12-month target price to be at $113, implying a potential return of ~5.8% over the closing price of September 9, 2016. On a year-to-date basis, MON has moved up by 8.4%.


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