What’s Next For Monsanto?
May 31, 2016 For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May 9, the company was approached by Bayer regarding the possibility of being acquired. An offer of acquisition was formally made – and made public – on May 23, amounting to $62 billion in an all-cash deal that would have given each Monsanto shareholder $122 per share of stock. This represented a 37% premium over Monsanto’s then stock price on the open market.
Loading ...A few days later, Monsanto formally rejected this bid, with the company saying it “undervalued” the agricultural giant’s market worth. However, Monsanto Chief Executive Hugh Grant indicated his company was “open to further discussions” with Bayer regarding a possible deal.
So what happens now? That is the $62 billion question, so to speak.
Most likely, there are three possibilities:
- Bayer ups its offer for Monsanto. Most market watchers believe the St. Louis company could be had for a per share price of between $135 and $140, which would put the total acquisition cost in the $70 billion range. This might be too high a price for Bayer’s taste, but what’s a fewfea billion dollars more among friends?
- Another potential suitor such as BASF steps up to the plate and offers Monsanto substantially more money to be acquired.
- Monsanto stands pat and stays its own independent company.
At this point, any or all of these scenarios might be in the works, but nothing will be known for a few weeks at least. Generally, however, it is my experience that once a company “is in play” as Monsanto seems to be at the moment, some kind of market deal tends to follow fairly quickly. Either way, it should make for some fascinating market speculation during the upcoming summer months.
As always, stay tuned . . .
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