Monsanto (MON) said on Wednesday it agreed to an improved $128-per-share offer from Bayer, (BAYRY) clearing the way for the creation of the world's biggest farm-inputs supplier.
The bid values St. Louis-based Monsanto at about $66 billion including debt and represents a 44% premium to the target's share price on May 9, the day before Bayer lodged the first of its four bids for Monsanto.
"We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration," said Monsanto chairman and CEO Hugh Grant in a statement.
Shares in Monsanto are likely to open higher on Wednesday as the new offer represents a 21% premium to Monsanto's closing price of $106.10 on Tuesday. Bayer shares traded Wednesday afternoon in Frankfurt at €95.48 ($106.75), up €1.80, or almost 2% on their Tuesday close.
Goldman Sachs analysts noted that Bayer is playing 17.4 times estimated 2016 Ebitda for Monsanto before synergies.
The deal will combine Bayer's crop chemicals business, which ranks No. 2 in the world behind Syngenta (SYT) , with the world's largest seed maker to create a company accounting for just under a third of the global market for farm-inputs. Pro-forma sales of the combined group would have amounted to €23 billion over 2015.
The deal comes amid a spate of consolidation in the agricultural supplies sector. Syngenta, which last year rejected a takeover by Monsanto, is in the process of finalizing a takeover by ChemChina, while Dow Chemical (DOW) and Du Pont (DD) are working to merge and spin off their seeds and farm chemicals operations.
