Monsanto Company’s MON shareowners recently voted to approve the company’s acquisition by the German chemical behemoth, Bayer AG BAYRY . Under the terms of the merger deal, Monsanto’s shareowners will secure $ 128 per share in cash at the closing of the deal.
Restoring Hope on Bayer’s Tie-Up
Since the acceptance of Bayer’s buyout offer (Sep 14, 2016), Monsanto’s stock recorded an average negative return of 2.03%, as against 2.57% of negative return provided by the Zacks categorized Agriculture/Products industry.
Sluggish global economy, lower investments in agricultural inputs, volatile weather patterns and sturdy competition in grain exports have been putting pressure on the companies offering services within the global seeds, traits and agricultural chemical industry.
Prominent players within the market such as Syngenta AG SYT , The Dow Chemical Company DOW , E. I. du Pont de Nemours and Company DD and ChemChina; all are heading toward collaboration.
Bayer’s $ 66-billion all-cash buyout price has turned out to be a signature deal for the Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Amid the consolidation contest going on within the industry, Monsanto would likely place itself in a more competitive position by joining hands with the German drug and crop chemical maker.
Moving Ahead
Monsanto declared that Bayer’s partnership would unlock the next tranche of opportunities and growth for its business.
Notably, the stock’s projected sales growth (F1/F0) is currently pegged at 2.41% and estimated earnings per share growth (F1/F0) valued at 4.55%.
In sync with the deal, the company intends to reinforce its existing product portfolio and offer innovative solutions to farmers. Major issues such as food scarcity and rapid climate changes are expected to be addressed more promptly with such services.
Both companies look forward to successfully close the transaction by the fall of 2017. The deal is currently subject to several regulatory approvals and customary closing conditions. However, Bayer has pledged to reimburse a higher break-up fee of $ 2 billion to Monsanto, in case there is a deal blockage due to regulatory turmoil.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Plantations International