Monsanto agrees to Bayer buyout, which would create a global chemical and agricultural giant

Reporting from FRANKFURT, Germany  —  U .S. seedmaker Monsanto Co. has agreed to a $57-billion buyout offer from Germany’s Bayer in a deal that would create a global agricultural and chemical giant.

The deal was announced Wednesday at a time when a record harvest is driving crop prices to painfully low levels for farmers.

It was the third time in four months that Bayer returned with a richer offer in its pursuit of Monsanto.

Including debt, the deal is valued at $66 billion. If approved, Monsanto will continue to be based in St. Louis.

Bayer said Wednesday that it would pay Monsanto shareholders $128 per share, a 44% premium over Monsanto’s closing price on May 9, the day before a proposed deal was announced.

The deal must still be approved by both Monsanto shareholders and regulators, who in the U.S. have recently rejected a pair of megadeals in the health sector.

Signaling its confidence that it would be able to push the deal through, Bayer as part of negotiations told Monsanto that it would pay a $2-billion breakup fee if it falls apart.

Bayer said the transaction brings together two different but complementary companies. Bayer makes a wide range of crop-protection chemicals that kill weeds, bugs and fungus, while Monsanto is known for its seeds business and the weed killer Glyphosate.

Bayer, based in Leverkusen, Germany, said the companies’ combined agriculture business would keep its seed business and North American headquarters in St. Louis.

Monsanto has 10 facilities in California, including a seed-production plant in Oxnard and a research site in Woodland, northwest of Sacramento. Its other California locations include La Jolla, Davis and Salinas.

The company also paid $917 million in 2013 to buy a San Francisco firm, Climate Co., which provides weather monitoring and simulation, crop- and seed-performance data and other tools that help farmers’ production and efficiency.

Four years ago, Monsanto was a lead opponent of Proposition 37, a ballot measure that would have made California the first state in the nation to require the labeling of genetically engineered foods. The measure was defeated and especially lost big in the agricultural areas of the state’s Central Valley. This summer, however, President Obama signed a law requiring such labeling nationwide.

Bayer initially offered $122 per share for Monsanto, then $125 per share, before the companies agreed to a final per-share sale price of $128.

Monsanto Chairman and Chief Executive Hugh Grant said the deal “represented the most compelling value for our shareholders, with the most certainty through the all-cash consideration.”

Bayer said it would raise the cash to pay for Monsanto by issuing debt and $19 billion in equity, including a mandatory convertible bond and a rights issue.

Bayer shares rose 3% to 96.11 euros. Shares of Monsanto were up 1.5% midday Wednesday.

Times staff writer James F. Peltz contributed to this report.

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UPDATES:

10:05 a.m.: This article has been updated with information about Monsanto’s California presence and current stock information.

7:29 a.m.: Updated with details throughout.

5:35 a.m.: This article has been updated with additional information.

This article was originally published at 5 a.m.