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.
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%.