BERLIN (AP) - German drug and chemicals company Bayer AG 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 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, which is headquartered in St. Louis, 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 3.1 percent in early Frankfurt trading Monday to $97.37. Monsanto shares jumped 11.3 percent to $112.98 in pre-market trading.
The German company said 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.
Q: What's going to happen to people who work for Monsanto?
A: Bayer says the head office for the combined seed business will be in St. Louis, where Monsanto is headquartered.
But some jobs probably have to be lost somewhere to achieve the advertised savings
Neither company offered any detail on that issue. Chief Finance Officer Johannes Dietsch mentioned marketing and research and development as two areas where synergies could be found.
Q: What's it mean for Monsanto's headquarters community?
A: The St. Louis region has lost several other corporate headquarters to mergers in recent years. Monsanto's corporate office for all phases of its business is in one St. Louis suburb, Creve Coeur, and its research hub is in another, Chesterfield. All told, the company employs more than 5,000 workers in the St. Louis region.
St. Louis was once home to several Fortune 500 companies, but mergers in recent years have changed that. The most significant corporate loss was in 2008, when Belgium-based InBev bought Anheuser-Busch, the beer maker long identified with St. Louis.