Seed World

Bayer Cuts Monsanto Deal Value to $63.5 Billion

The Monsanto deal is now valued at $63.5 billion including debt, down from an initial $66 billion, because the Creve Coeur-based company had lowered its financial liabilities, Bayer’s finance chief said on Thursday.

The planned acquisition will boost Bayer’s agriculture sales to the same level as its core health care business, but the move has not been universally popular among shareholders and has led those with a pharma focus in particular to sell out.

in September 2016 when the deal was announced that it would raise $19 billion worth of fresh equity capital, some of which would be covered by about $4.7 billion in mandatory convertible notes issued in November 2016.

“We will examine whether and to what extent the equity component of the financing will change,” Bayer Chief Executive Werner Baumann, the deal’s main architect, said on Thursday.

The German firm has agreed to sell seed and herbicide businesses for about $7 billion to BASF to appease antitrust regulators, and has also been selling down its stake in plastics unit Covestro.

Bayer’s finance chief Johannes Dietsch said that cutting its stake in Covestro to below 25 percent had grossed about 2.5 billion euros more in proceeds than expected.

“By no means did the deal that was signed with BASF constitute the totality of antitrust divestitures,” Baumann said. “The agencies will render their verdict on what the necessary remedies are. It’s probably a first step and somewhat more is to come.”

Weak consumer healthcare

Bayer shares dropped 3.1 percent to 110.90 euros at 1034 GMT with some analysts citing weaker-than-expected consumer healthcare revenues after the company reported a 4 percent rise in third-quarter operating earnings, driven by gains in its prescription drug sales.

Bayer’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) came in at 2.2 billion euros ($2.6 billion), slightly higher than the average forecast by analysts of 2.12 billion euros, helped by continued growth in prescriptions for anti-clotting drug Xarelto.

Adjusted EBITDA at the consumer health unit, owner of brands such as sunscreen Coppertone and allergy remedy Claritin, fell a weaker-than-expected 16.5 percent to 274 million euros.

Bayer said U.S. consumers were switching to online purchases, leading to declines in established drugstore traffic which its own e-commerce push was not offsetting fast enough.