German drug and chemicals company Bayer AG, which has a large presence in the Triangle, announced Monday that it has made a $62 billion offer to buy U.S.-based crops and seeds specialist Monsanto.
The proposed combination would create a giant seed and farm chemical company with a strong presence in the U.S., Europe and Asia.
Bayer employs 12,500 people in North Carolina across all of its divisions, including about 1,000 workers in the Triangle.
The company’s operations in Research Triangle Park serve as both the North American headquarters of its crop science division as well as the global headquarters of Bayer’s seeds business. In 2014, Bayer opened a new $2.4 million bee research center on its RTP campus. The company also has a bee research facility in Clayton.
Under the terms of the merger, the global seeds and traits and North American commercial headquarters would move to St. Louis, Mo., where Mosanto is based. Darren Wallis, a Bayer spokesman, said Monday that the combined company will “continue to maintain a significant presence in RTP.”
The Triangle has become an agribusiness hub in recent years, with industry giants BASF, Bayer and Syngenta all having major operations here. The sector has been feeling the effects of a commodity slump that significantly reduced the incomes of farmers over the past two years.
The Bayer-Monsanto deal is just the latest merger activity in the industry. Dow Chemical and DuPont merged last year, and in February ChemChina, a Chinese state-owned chemical maker, agreed to buy Syngenta, the world's top maker of pesticides, for $43 billion. That deal came about after Syngenta repeatedly rejected Monsanto’s attempts to acquire it.
Monsanto, meanwhile, is in the process of shuttering its operations in the Triangle. In October, it announced that it was relocating its research and development operations in RTP to Missouri. About one-third of the 75 employees who worked in RTP were expected to relocate to the company’s global R&D center in Chesterfield, just outside St. Louis.
The company expects to complete its exit from its RTP facility by the second half of this year, with the remaining jobs being eliminated at that time. Monsanto said in October it plans to explore a possible sale of its RTP site.
Bayer said the all-cash offer values shares of Monsanto at $122 each. That compares with a closing price Friday of $101.52 and is 37 percent higher than the closing price of $89.03 on May 9, the day before Bayer made a written proposal to Monsanto.
Bayer had said on Thursday that its executives met recently with their Monsanto counterparts “to privately discuss a negotiated acquisition” of the specialist in genetically modified crop seeds. Monsanto said then that it was reviewing Bayer’s proposal.
Bayer said it plans to finance the acquisition with a combination of debt and equity, the latter to be raised largely by issuing new shares. Bayer’s shares, which tumbled after the initial announcement last week, dropped 5 percent Frankfurt trading Monday to close at 85 euros ($95.35). Monsanto shares jumped 4.4 percent to $106.
The German company said that it “is prepared to proceed immediately to due diligence and negotiations and to quickly agree to a transaction.”
“Monsanto is a perfect match to our agricultural business,” Bayer CEO Werner Baumann said in a video message posted on his company’s website. “We would combine complementary skills with minimal geographic overlap.”
“The acquisition of Monsanto checks all the boxes in terms of strategic fit and value creation potential,” he added. “At the same time, ongoing consolidation activities in the industry make this combination by far the most attractive one.”
Baumann said Bayer expects the transaction to “create significant synergies” and bolster earnings in the first full year after it is completed.
Both companies are familiar brands on farms around the globe. Bayer’s farm business produces seeds as well as compounds to kill weeds, bugs and fungus.
Monsanto has some 20,000 employees and produces seeds for fruits, vegetables and other crops including corn, soybeans and cotton, as well as the popular weed-killer Roundup.
Bayer, headquartered in Leverkusen, Germany, employs some 117,000 people worldwide.
Staff writer David Bracken contributed.