Monsanto Company (NYSE:MON)
On Monday morning before the market opened, Monsanto (MON) announced that they had received a bid from Bayer AG (DE:BAYGN) to the tune of $122 per share equaling a market value of $62 billion or a 37% premium in share price. If this goes through it would create the largest corporate takeover by a foreign firm. “The German firm has faced investor concern over whether its relatively high-debt level would allow it to pay for such a transaction without a capital increase or divestitures. Bayer on Monday said the future strong cash-flow generation of the combined company’s crop businesses would allow it to quickly deleverage.” Before the bid by Bayer, analysts had an average price target of $99.06.
Looking at the chart you will see that shares have been getting some nice gap ups the last couple weeks as news started to circulate that Bayer was interested in buying MON, but we didn’t know the specifics at the time. Now that we know what the price is we could see shares continue to trade towards that level but until everything is confirmed and approved shares will trade off supply and demand. Look for support to come in at $104 and $103.46 followed up by the big $100 level while resistance will be met at $105, $111.16 and $120. Shares are currently trading well above their 200-day moving average that is sitting at $92.63.
Executive Comments
We have long respected Monsanto’s business and share their vision to create an integrated business that we believe is capable of generating substantial value for both companies’ shareholders,” said Werner Baumann, CEO of Bayer AG. “Together we would draw on the collective expertise of both companies to build a leading agriculture player with exceptional innovation capabilities to the benefit of farmers, consumers, our employees and the communities in which we operate.
Bayer is committed to enabling farmers to sustainably produce enough healthy, safe and affordable food capable of feeding the world’s growing population,” said Liam Condon, member of the Board of Management of Bayer AG and head of the Crop Science Division. “Faced with the complex challenge of operating in a resource-constrained world with increasing climate volatility, there is a clear need for more innovative solutions that advance the next generation of farming. By supporting farmers of all sizes on every continent, the combined business would be positioned as the partner of choice for truly integrated, superior solutions. (PRNewsWire)
MON Profile
Monsanto is a provider of agricultural products for farmers. The Company’s seeds, biotechnology trait products, and herbicides provide farmers with solutions that improve productivity, reduce the costs of farming, and produce better foods for consumers and better feed for animals. It manages business in two segments: Seeds and Genomics, and Agricultural Productivity. Through its Seeds and Genomics segment, it produces seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and it develops biotechnology traits that assist farmers in controlling insects and weeds. Through its Agricultural Productivity segment, it manufactures Roundup brand herbicides and other herbicides and provides lawn-and-garden herbicide products for the residential market.