Syngenta AG

March soybean futures contracts were trading near the support level of $8.70 per bushel on February 23. Prices fell for the second consecutive trading day.

In this part of the series, we’ll look at agricultural fertilizer producers’ valuations from their historical standpoints. Over the long run, valuation multiples impact a company’s share price.

A few days ago, Monsanto (MON) agreed to Bayer’s takeover offer of $128 per share for a total deal value of $66 billion.

On August 13, the crop index stood at 89.9. It rose by 1% following the USDA’s latest stock-to-use ratio, which was published on August 12.

Some anti-trust agencies have pushed back their merger approval deadlines over anti-competitive concerns the deal will likely create.

On September 14, 2016, Bayer signed an agreement with Monsanto (MON) to acquire it for $66 billion, or $128 per share. The offer represented a 44% premium over Monsanto’s stock price.

The Seed and Genomics segment’s gross margins expanded from 34.0% in 4Q16 to 41.4% in 4Q17.

Monsanto’s (MON) proposed merger with Bayer is expected to be completed by the 2Q18—but only if it gets the green light from antitrust authorities.

Monsanto reported operating income or EBIT of $247 million, which rose from -$272 million in fiscal 1Q16.

The price-to-earnings ratio is a popular multiple investors use to determine the value of their investments in companies such as Monsanto (MON).

In 2016, Monsanto (MOO) had 21,000 employees. Let’s take a look at some of the company’s key executives.

Including the United States, Mexico, and Canada, Monsanto’s total North American sales contribution stood close to 68% of its 2016 sales.

Monsanto (MON) conducts its global sales through two broad segments known as the Seeds & Genomics and Agricultural Productivity segments.

For over 100 years, Monsanto (MON) has been spread across several countries, with some of its brands being sold and used in over 150 countries.

In 1964, Monsanto introduced its first herbicide by the name of Ramrod. Four years later, in 1968, the company commercialized an herbicide called Lasso.

The global soybean stock-to-use ratio for soybeans rose to ~25.1% in December 2016, as compared to 24.8% in November 2016.

For 2017, Wall Street analysts are estimating that Monsanto (MON) could report EPS of $4.70, which would translate into earnings growth of 5.3% year-over-year.

Monsanto’s (MON) forward PE valuation multiple has recently trended higher, and so has the price of its stock.

Unlike corn, the global soybean stock-to-use ratio is lower compared to the global stock-to-use ratio of 26.5% last year.

The global stock-to-use ratio for soybeans rose 1.6% to ~23.5% in October—compared to 22% in September. Soybean’s ratio is lower than last year.

On May 24, Bunge announced that its board of directors approved a 10.5% increase in the company’s regular quarterly common share cash dividend.

In June 2016, the global soybean stock-to-use ratio stood at 20.2%, which was at its lowest point compared to the past four years.

Bunge (BG) paid $549 million to shareholders through dividends and share repurchases in 2015.

Ammonia is used to make phosphate fertilizers like DAP (diammonium phosphate) and MAP (monoammonium phosphate).

What’s in it for Bayer when it comes to acquiring Monsanto (MON)? The answer lies in Bayer’s business segments and geographic reach.

For fiscal 2Q16, Monsanto reported EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.8 billion.

After the merger, DowDuPont will spin off into three independent and public companies—agriculture, material science, and specialty products.

With corporate changes, the combined company is expected to generate total cost savings of $3 billion over the next two years after the merger.