Monsanto and Bayer: Performance update
It’s been about a month since Bayer and Monsanto (MON) announced they would merge to become one of the largest global agribusiness companies.
Over the one-month period beginning September 14, 2016, Bayer and Monsanto stocks both fell. To put it in numbers, Bayer fell 4.2%, and Monsanto fell ~4%. As of October 14, 2016, Monsanto was trading at $102.54, which doesn’t bode well with merger optimists. That’s about 20% below Bayer’s acquisition price.
Over the same period, the S&P 500 (SPY) rose slightly by 30 basis points. The VanEck Vectors Agribusiness ETF (MOO) rose 70 basis points over the same period. We consider MOO to be a more relevant benchmark since agricultural chemicals account for about 30% of its portfolio. MOO includes companies such as Monsanto, Syngenta (SYT), PotashCorp (POT), and Mosaic (MOS).
Monsanto (MON) continues to trade at its current level despite reporting better-than-expected earnings. On October 5, 2016, the company released its fiscal 4Q16 and fiscal 2016 earnings. The results showed an ongoing EPS (earnings per share) of $0.07 per share in fiscal 4Q16 against analysts’ estimates of -$0.02 per share. Read our full coverage on Monsanto’s 4Q16 earnings at Monsanto’s Fiscal 4Q16 Earnings: Giving the Market a Lift.
In the following parts of this series, we’ll look at recent developments in the merger deal.