Monsanto Shares Soar after Bayer Raises its Acquisition Offer

The shares of Monsanto Company (NYSE:MON) are trading higher today after Bayer AG (ETR:BAYN) increase its acquisition offer and also proposed a $1.5 billion reverse anti-trust break fee.

The stock price of Monsanto surged almost 3% to $104.02 per share around 2:06 in the afternoon in New York.

Bayer’s new offer

Bayer is now offering $125 per share to acquire Monsanto in an all-cash transaction. The German chemical and pharmaceutical company’s previous proposal was $122 per share, which was rejected by Monsanto citing that reason that the offer “significantly undervalues” the company and does not address certain risks related to a transaction.

In a statement, Bayer said it has “comprehensively addressed Monsanto’s questions concerning financing and regulatory matters to complete the deal. The companies held private discussions.

Bayer also reaffirmed its confidence to close the deal successfully by offering a $1.5 billion reverse antitrust break fee. The German chemical and pharmaceutical company said its Syndicated Loan Facility Agreement is sufficient to provide financing for the deal, and five banks are prepared to serve as co-underwriters.

Bayer said the “revised offer retains compelling value creation potential” for its shareholders and reiterated its full commitment to pursue the transaction.

Best opportunity for Monsanto shareholders

“We are convinced that this transaction is the best opportunity available to provide Monsanto shareholders with highly attractive, immediate and certain value. Bayer is fully committed to pursuing this transaction,” said Bayer CEO Werner

Its revised offer represents a 40% premium to the closing price of Monsanto’s stock on May 9.

Monsanto issued a statement confirming its receipt of the revise offer from Bayer. Its Board of Directors will review the proposal in consultation with its financial and legal advisors.

“Monsanto will have no further comment until its Board of Directors has completed its review. There is no assurance that any transaction will be entered into or consummated, or on what terms,” according to the American agricultural and biotechnology company.