There’s about to be a new monopoly in town
German pharmaceutical company Bayer launched a cash call for 6 billion euros ($7 billion) to finance the acquisition of seed and pesticide manufacturer Monsanto. The deal estimates at around $62.5 billion (!!!).
Last week, Bayer received approval from the US for the acquisition, which was one of their biggest hurdles. Although this deal will create the largest pesticide company in the world by an enormous margin, the Department of Justice did not deem the deal as violating any antitrust laws.
And although the cash call won’t be enough to secure the deal, Bayer is taking other measures to ensure it acquires the seed company. Further, they sold a good chunk of their stake in plastic manufacturer Covestro, which supplied them with 4.5 billion euros. The firm also sold assets to German chemical producer BASF for 7.6 billion euros.
According to Bayer’s executives, they are close enough to close the deal, which will supposedly close on Thursday. Moreover, they must stay true to this deadline, for Monsanto will pull out of the deal after June 14thand raise the asking price.
Forecasting their earnings based on their 2017 sales, Bayer will produce 20 billion euros worth of agricultural products. The next leading competitors, Corteva Agriscience and Syngenta, will make roughly 12.4 and 7.9 billion euros, respectively.
This acquisition has no small asking price, but clearly, the deal will show immediate returns for Bayer. The competition will have significant work to do if this deal goes through.
Featured image via Flickr/Conan