Bayer is ready to close Monsanto deal with $7 bn cash
German pharmaceutical and chemical giant Bayer said on Sunday (Jun 3) it will raise up to €6 billion (US$7 billion) in fresh capital to help finance its takeover of US agrochemicals group Monsanto.
The German drug maker last week won U.S. approval for the Monsanto takeover, clearing a major hurdle for a deal that will create by far the largest seeds and pesticides maker.
The cash call is smaller than initially envisaged by Bayer because Monsanto reduced its debt while the antitrust review dragged on.
Bayer said in a statement it would issue 74.6 million new shares to existing shareholders at a price of €81 per share.
That is markedly cheaper than Bayer’s current share price, which closed at €103.30 on the Frankfurt stock exchange on Friday.
Shareholders would be able to buy two new shares for every 23 shares currently held between Jun 6-19, the statement said.
“As a result, Bayer expects to generate gross proceeds of €6.0 billion from the capital increase,” the German maker of Aspirin said.
It “intends to use the net proceeds from this transaction and the bond issues to repay amounts drawn under the syndicated loan facilities agreement for the acquisition of Monsanto.”
The capital increase was “a significant component of the financing for the acquisition of Monsanto and the final equity measure associated with this undertaking,” said chief executive Werner Baumann.
In addition, Bayer is planning to issue up to €20 billion in bonds denominated in both dollars and euros.
Originally announced in September 2016, Bayer are on the cusp of finalising the deal following conditional US government approval.
The deal was originally for US$66 billion, but subsequent divestment decisions mean it is now valued at around US$62.5 billion.
Bayer is set to close the transaction on June 7, according to a media report on Sunday.
Bayer will create an agricultural-supplies giant with sales of about €20-billion, based on 2017 figures, when taking into account the divestments.