In Bayer’s efforts to expand their production and address the ever increasing demand to boost farmer productivity, the German chemical and pharmaceutical company has now offered more than $65 Billion in order to procure Monsanto, an American agricultural and agrochemical biotechnology company. This would allow Bayer to become one of the world’s biggest crop seeds and chemical suppliers with Monsanto being the biggest seed provider and Bayer with a strong pesticide roster.
The plan to buy Monsanto started in May earlier this year. Bayer since then has been rejected a couple of times refusing to give them access to the company until Bayer chooses to raise their bid amount.
Aside from an increase in their bid, Monsanto has also asked for clarifications on possible risks and other matters before the two companies coming to an agreement.
Past and Ongoing Negotiations with Monsanto
Bayer’s negotiations with the St. Louis-based company which started in May have been upped with a 2-percent amount prior to the previous offer. Bayer has already stated that they are prepared to pay a price of $127.50 each share in case an agreement can be struck between the two companies.
Despite analysts and investors expecting the German company to keep on increasing its bid, the latest $65 billion offer has helped tone down these rumors to which will be expected if the terms will come to failure in acquiring Monsanto.
Bayer’s increased offer of more than $65 Billion from the previous $125 per share which includes debt has been acknowledged by the biotech seed company and has stated that the current negotiations with Bayer positive.
Following Bayer’s announcement to increase their bid to $65 billion from Bayer’s May $42 billion offer, stocks raised during Monday trading opening at 93.85 and closing at 94.08 trading the highest at 94.48. Mid-Tuesday trading also moved forward with a rally in the price of Bayer’s stock.
However, after rejecting Bayer’s second offer of $1.25 per share, Monsanto has announced that they are still open for further talks with the German company.
Although there hasn’t been a clear signal to whether Monsanto will accept the offer soon, they have noted that the most recent offer has been “constructive” and is still undergoing evaluation of the recent bid.
Analysts have been stating that the $127.50 per share could still lead to a failure in an agreement is are still expecting a bigger bid from Bayer that can range from $130-$135 per share before Monsanto comes into a decision to agree.
Over the past months, since Bayer announced its intentions to acquire Monsanto, their stocks have shown short-ranged declines in the price which will be shortly followed by a green candle and has shown the following prices to be overbought and oversold.
Despite analysts believing that Monsanto won’t yield to Bayer’s offer soon, an agreement would lead to Bayer becoming the largest biotech seed supplier and producer of crop biotechnology leading them to become the largest seed and pesticide producer in the world.
Following the announcement, Bayer’s stocks should rally especially with the indicator just breaking out of the level 30 pointing up and is unlikely for the stock to drop in the following sessions.
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