FRANKFURT/NEW YORK (Reuters) - Chemicals and healthcare group Bayer AG (BAYGn.DE) is poised to announce the acquisition of U.S. seeds company Monsanto Co MON.N on Wednesday for more than $66 billion, clinching the biggest deal of the year, people familiar with the matter said.

A trader works at the post where Monsanto Co. is traded on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 25, 2016. REUTERS/Brendan McDermid

By accepting Bayer’s offer, the largest cash acquisition proposal on record, Monsanto is set to give the German company a shot at grabbing the top spot in the fast-consolidating farm supplies industry, combining its crop science business with Monsanto’s strength in seeds. It will also set the stage for the deal to be closely scrutinized by antitrust regulators.

The breakthrough in negotiations, which follows more than four months of talks, came after Bayer further improved on the sweetened offer of $127.50 per share in cash it disclosed last week, the people said.

However, the deal will still value Monsanto at less than $130 per share, which the company was previously hoping to fetch, the people added.

Once St. Louis, Missouri-based Monsanto’s board of directors approves the deal on Tuesday, Leverkusen-based Bayer’s supervisory board will meet on Wednesday to also authorize the transaction, with an announcement expected before the stock market opens in New York on Wednesday, some of the people said.

It is still possible the board of either company could decide to walk away from the deal at the last minute, the people cautioned.

The sources asked not to be identified because the deliberations are confidential. Bayer and Monsanto declined to comment.

Monsanto’s shares ended 0.8 percent lower at $106.10 in New York on Tuesday amid uncertainty over whether any agreed deal will clear antitrust hurdles. The stock later climbed to $108.79 in after-hours trading. Bayer shares ended trading in Frankfurt down 0.3 percent at 93.3 euros.

Bayer said last week talks with Monsanto had advanced and that it was willing to offer $127.50 per share, up from $125 previously, valuing Monsanto at more than $65 billion, including debt.

Sources told Reuters that topping up the price secured Bayer access to more privileged information on Monsanto’s business performance and paved the way for more detailed negotiations.

“Given recent updates on the Monsanto approach suggest a final conclusion may be close, we suspect (Bayer) will work hard to try and reach a final conclusion before the Meet Management event, if possible,” Jefferies Research analyst Jeffrey Wolford said in a research note before the news, referring to Bayer’s presentations day for analysts and investors in Cologne next Tuesday.

Bayer’s bid to combine its crop chemicals business, the world’s second-largest after Syngenta AG SYNN.S, with Monsanto’s industry leading seeds business, is the latest in a series of major consolidation moves in the agrochemical sector.

U.S. chemicals giants Dow Chemical (DOW.N) and DuPont (DD.N) have agreed to merge and spin off their respective seeds and crop chemicals operations into a major agribusiness.

Syngenta last year fought off unwanted suitor Monsanto, only to later agree to a takeover by ChemChina.</s>FRANKFURT, Germany (AP) — German drug and farm chemical company Bayer AG says it has signed a deal to acquire seed and weed-killer company Monsanto for $66 billion in cash.

Bayer says it is paying Monsanto shareholders $128 per share, which represents a 44 percent premium over Monsanto’s closing price on May 9, the day before a proposed deal was announced.

The deal is subject to approval by Monsanto shareholders and anti-trust regulators.

Bayer said Wednesday the transaction brings together two different but complementary companies. Bayer makes a wide range of crop protection chemicals, while Monsanto is known for its seeds business.

Leverkusen-based Bayer said the merged companies’ agriculture business would have its seeds business and North American business headquarters in St. Louis, Missouri, where Monsanto is currently based.</s>It is being reported that Monsanto will soon be taken over by Bayer AG. The sides have come together and agreed on a cash deal of 66 billion dollars.

Monsanto, a company specializing in seed and weed killer, has demanded a whopping $128 per share, a number highly inflated from its initial closing price, four months ago.

This deal is yet to be approved, but the combination of Bayer’s crop protection background, paired with Monsanto’s wide reach in the seed industry has the prospective, German-based owners grinning. The company would shift its main North American headquarters to Monsanto’s current location – St. Louis, Missouri.

The 66 billion dollar deal will be the largest takeover in 2016.</s>American seed and weed-killer company Monsanto and German medicine and farm chemical maker Bayer are combining in a deal that could help farmers produce higher yields to address challenges from global warming to rising food demand from a fast-growing global population.

Consumers could benefit from more-affordable and healthier food options as well as the companies' using their expertise to help farmers limit their chemical use and environmental impact, company executives said Wednesday after the all-cash deal was announced.

It comes amid record harvests driving crop prices to painfully low levels for many farmers.

After four months of courtship, Leverkusen, Germany-based Bayer AG said Monsanto Co. accepted its third offer. In addition to the $57 billion price for shareholders, Bayer is assuming $9 billion in Monsanto debt. It will pay Monsanto shareholders $128 per share, $6 above its initial offer and a 44 percent premium over the St. Louis company's closing price before rumors of a bid emerged.

Because Bayer is mainly funding the deal through debt, by selling bonds and stock, Jefferies LLC analyst Jeffrey Holford wrote to investors, Bayer's increased debt load could limit investment in its "sub-optimal" prescription drug pipeline and its consumer health business.

The deal would create a global agricultural and chemical giant with a broad array of products. Fitch Ratings noted the combined Bayer would have a 25 percent share in some markets, "almost certainly drawing regulatory scrutiny and posing antitrust obstacles."

That's because the deal combines two of the six U.S. and European companies that dominate in agrochemicals.

"It will ... create an innovation engine for the next generation of farming," Monsanto CEO Hugh Grant said.

The world's population is expected to jump by nearly 3 billion people, to 9 billion, by 2050. Together with the effects of warmer temperatures, more-severe storms, less land available for farming and the need to reduce pollution and greenhouse gas emissions from farming operations, that is pressuring farmers to be more productive.

"It's going to take a lot of innovation to ensure that everybody can be fed," and the combined company will be able to speed up product improvements to help, Liam Condon, head of Bayer Crop Science, told The Associated Press.

Affordability also is an issue, Condon said, as people in many poor countries spend more than half their income on food, compared to 10 percent to 15 percent in the U.S.

Bayer and Monsanto both are well known to farmers and home gardeners. Monsanto sells seeds for fruits, vegetables, corn, soybeans, cotton and other crops, plus heavily advertised Roundup weed killer. Bayer sells chemical and biologic crop protection products and the Bayer Advanced garden chemicals line.

Both companies offer services in "digital farming," helping farmers use data from sensors in their fields and satellites to improve crop yields by choosing the best seeds and applying just the right amount of chemicals at the right time throughout the growing season.

Monsanto is a top maker of seeds genetically modified to resist drought, weeds and insects, among other "traits." They're not accepted in Europe due to health concerns, so Monsanto sells little in Bayer's backyard. Bayer is a major agricultural supplier in Europe, Asia and Africa, though it's best known for prescription drugs such as blood clot-preventer Xarelto and consumer health products including Aleve pain reliever and One A Day and Flintstones vitamins.

"The overlaps are minimal," Grant told reporters on a conference call. He said the deal "represented the most compelling value for our shareholders."

Bayer and Monsanto executives said they won't identify areas of business overlap before regulators in the EU, U.S., Canada, Brazil and two dozen other countries review the acquisition for potential antitrust issues. Bayer said it's so confident of approval that it's offered Monsanto a $2 billion breakup fee if the deal falls through.

Bayer and Monsanto executives wouldn't discuss the fate of the Monsanto name, but said the combined company's seeds and North American business will have headquarters at Monsanto's St. Louis base.

The companies also wouldn't discuss possible job cuts. Those are standard after big mergers and implied in this one, given that 80 percent of the $1.5 billion in synergies the companies predict after three years will be cost cuts in administration, sales and marketing.

Bayer said the trans-Atlantic tie-up should close before the end of 2017. Monsanto plans a shareholder vote on the deal in a few months.

In U.S. trading, shares of both companies closed up 0.6 percent, with Bayer at $104.85 and Monsanto at $106.76.

Johnson reported from Trenton, New Jersey, and McHugh reported from Frankfurt, Germany.</s>FRANKFURT, Germany (AP) — German drug and farm chemical maker Bayer AG says it has agreed to acquire seed and weed-killer company Monsanto in an all-cash deal valued at $66 billion.

Bayer says it is paying Monsanto shareholders $128 per share, which represents a 44 percent premium over Monsanto's closing price on May 9, the day before a proposed deal was announced.

The deal is subject to approval by Monsanto shareholders and anti-trust regulators.

Bayer said Wednesday the transaction brings together two different but complementary companies. Bayer makes a wide range of crop protection chemicals, while Monsanto is known for its seeds business.

Leverkusen-based Bayer said the merged companies' agriculture business would have its seeds business and North American business headquarters in St. Louis, Missouri, where Monsanto is currently based.

Bayer initially offered $122 per share, only to be rebuffed by Monsanto management, and then $125 per share before reaching the deal announced Wednesday.

Monsanto Chairman and CEO 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.</s>Monsanto, Bayer AG in $US66 billion deal to create world's largest seed and chemical supplier

After months of courtship, German pharmaceutical and chemical giant Bayer AG has finally stuck a deal to buy out American biotechnology company Monsanto.

Bayer AG, the company that invented aspirin and once trademarked 'Heroin' as a cough medicine, wooed Monsanto's board with a $US66 billion ($88 billion) offer on Wednesday night Australian time.

If successful, the deal, touted as the year's largest, will make Bayer AG the world's largest agricultural seed and chemical supplier.

It follows a string of similar mergers in the sector.

American industrial giants Dow Chemical and DuPont pioneer struck a merger in December last year, and Swiss-based chemical and seed company Syngenta agreed to a takeover by Chinese industrial giant ChemChina in February this year.

Now the internal negotiations are over, the biggest hurdle faced by the deal will be seeking approval from competition regulators around the globe.

Already, US Democratic senator and former primary candidate Bernie Sanders has slammed the deal, calling it a "marriage made in hell" and urging the US Department of Justice to block the deal.

Iowa State University Emeritus Professor Neil E Harl believes the deal should be blocked and a full market study undertaken into the lasting impact of the consolidation.

"There isn't enough attention given to who wins and loses in the long term from these deals," he said.

"You can definitely research this, it will give us all more information, and the time has come to take long-term view of the consequences."

The most worrying consequence for Professor Harl is having too much ownership of critical seeds and crop chemicals concentrated in the hands of too few companies.

In the future, these companies will also hold massive amounts of farm data, collected from precision farming equipment as well.

Monsanto's market leadership in agricultural seeds and chemicals makes it a highly strategic acquisition for Bayer AG, which itself is a dominant crop chemical company.

NSW farmer Dan Cooper advises the Australian Consumer and Competition Commission on agricultural policy, and said farmers were waiting for more details of the deal to emerge.

"Lessening of the competition is the main concern, but also that investment in research and investment could decrease too," he said.

"Every time a famer buys chemicals or seeds, the research and development behind that probably originated from one of those major companies."

The three companies that will emerge if the deals are approved — Dow-DuPont, ChemChina-Syngenta and Bayer-Monsanto — will collectively control close to three-quarters of the agricultural chemical seeds market, according to analysis by Bloomberg.

PAC Partners agribusiness analyst Paul Jensz has faith the competition regulators will act as a sufficient check and balance to the major mergers, but says mid-sized companies will also offer an alternative to farmers.

"Australia's Nufarm is one example that provides a strong alternative, with its options of generic crop chemical that have come off patent," he said.

"It's also important to consider the massive, massive amounts of money required for new research and development, and these major companies will be better positioned to undertake that."</s>Dubliner Liam Condon is a marathon man. And the Navan Road native is now limbering up for the run of his life: to seal one of the largest corporate takeovers in history.

On Wednesday, Bayer, the German pharmaceuticals and chemicals giant, agreed a deal to buy Monsanto, the US seed superpower, in a $66 billion deal.

After a lengthy corporate courtship, the all-cash bid accepted by Monsanto – the largest in German business history – will create a new giant in the agribusiness sector and, Bayer hopes, give it a crucial lead in the struggle to feed a growing population in a world with limited resources.

As president of Bayer’s agribusiness crop science division, Condon knows the deal he helped put together is far from done. It will face close scrutiny from around 30 regulators worldwide, from markets, agriculture lobby groups and farmers. A taste of what is to come was an instant, negative response from environmental groups, which regularly accuse Bayer and Monsanto of putting corporate concerns before environmental responsibility.

With the ink not yet dry, Condon will be a key figure in sealing the deal.

“This is an ultra marathon and, in reality, we are just over the starting line on this one, not at the finishing line,” says the 48-year-old executive. “This is the start of a long journey for us, but I’ve run ultra marathons, so I know how this feels.”

Pacing has been a key to Condon’s decade-long rise through the ranks of Bayer, one of Germany’s most iconic companies, as it has sought to globalise its business.

He joined Bayer, the inventor of aspirin, in 2006, when it swallowed his employer at the time, the Berlin pharmaceutical company Schering. After that takeover, Condon was sure he would be surplus to requirements. Instead, the multilingual DCU marketing and languages graduate has risen steadily through the ranks in the intervening decade.

After spells working for Schering and Bayer in Japan and China (speaking Japanese and Mandarin), he was appointed head of Bayer HealthCare in Germany in 2010, a key pillar of the empire which sells everything from aspirin to diabetes medication. It was a well-timed promotion, coming just as Bayer appointed its first non-German chief executive since the company’s foundation in 1863.

And Condon has kept moving. This year he was appointed to the Bayer board and also heads Bayer Crop Science, the division that is poised to swallow Monsanto.

Bayer had been pursuing the US company since May, when it made an initial bid of $122 per share, valuing Monsanto at $62 billion. The US company rejected that bid but, after itself trying and failing last year to take over Swiss rival Syngenta, Monsanto managers said they were open to further talks.

Two further offers were made and rebuffed until Bayer upped its share offer, along with a $2 billion “break” clause for the US group in case the deal is halted by regulators.

It’s a lot of money but Bayer executives are confident the deal will go through.

Monsanto chief executive Hugh Grant told investors it was a “clean deal”. For Bayer chief executive Werner Baumann it is a “fantastic combination for modern agriculture”, creating a one-stop shop that marries Bayer’s power in the pesticide market with Monsanto’s pesticide- and insect-resistant seeds.

When executives face regulators around the world, they will argue that the merging businesses operate in different fields and in different geographical markets: Monsanto in the Americas, Bayer in Europe and Asia.

“Regulators are usually looking for overlap that would hinder competition and for anything that could lower innovation,” says Condon. “But we have done extensive analysis, as has Monsanto . . . and see a high complementarity of portfolios.”

Bayer is hopeful the deal can go through next year because, in Condon’s view, there isn’t any time to waste. At seven billion, the world’s population continues to grow rapidly, with about 60 million additional mouths to feed so far this year.

But the Earth isn’t growing any larger and its resources are growing more limited, particularly as climate change kicks in. With the United Nations predicting a global population of 10 billion by 2050, how to make more food with fewer resources is crucial for the survival of the planet, Condon says, and it is core to Bayer’s corporate mission.

“The challenge is that there is no sense of urgency for many people, particularly in Europe, but we have a sense of urgency because we take a long-term view,” he says of his chosen field, where products take years to develop and test before they are market ready.

“There is a gap between the point of innovation and availability and we cannot wait for the tipping point where society says we need more innovation.”

Condon says a key challenge beyond sealing the deal will be explaining to the general public why pushing innovation in crop science and the growing digital farming sector is so important to tackle looming challenges coming over the horizon before they crash land in our everyday lives, at which point they will be too great to master.

Bayer and Monsanto executives say they have received encouraging feedback from regulatory agencies, but the market reaction to the proposed merger was more equivocal.

In Germany and elsewhere, investors suggested Bayer is paying over the odds. Bayer managers counter those concerns by arguing that – with combined sales of $23 billion in 2015 – synergy savings from the merger could see a boost of $1.5 billion to its underlying profit within three years.

Then there is the matter of timing. Bayer and Monsanto’s rivals in the $100 billion global seed and pesticide market are also teaming up to cut costs, prompting a former federal trade commission official to warn that Bayer and Monsanto had “chosen to do a deal in a year of merging dangerously”.

Farmer groups are concerned about what consolidation of two such massive companies will mean, given that in the United States alone they control almost 70 per cent of the cotton seed market, according to data from the Konkurrenz Group.

And in Monsanto Bayer is acquiring a company that, particularly in Europe and in Bayer’s German homeland, is what could euphemistically be described as a burdened brand thanks to products that include DDT and Agent Orange.

Founded in 1901, Monsanto, based in St Louis, Missouri, is a ubiquitous presence in US life where, three decades ago, it conducted the first field trials of genetically modified (GM) crops.

After a series of mergers, acquisitions and spin-offs, today’s Monsanto shares the name but only part of the history. It is an agrochemical-biotech giant that produces a quarter of the world’s seeds as well as Roundup, a glyphosate-based herbicide. In July, EU member states voted to restrict Roundup’s use by the bloc’s farmers for 18 months amid concerns that glyphosates cause cancer.

With Friends of the Earth dubbing the merger a “marriage made in hell”, how does Condon feel about effectively being the groom?

The Dubliner dismisses criticism of Monsanto in Europe as having “no correlation to the size of the business” here. “We are absolutely committed going forward to continuing with our foundational values as a company, with strong focus on sustainability, innovation and social responsibility,” he says.

Of course, Bayer’s chemicals business is no stranger to controversy, with long-running concerns that one of its own pesticides is harmful to certain bee populations – claims Bayer rejects. But, in consumer minds at least, if Bayer is aspirin and headache relief, is Monsanto simply a headache?

Condon says no decisions have been taken so far about the future of the Monsanto brand but says its product brands are “probably more important to grow customers”.

“When Monsanto was taking an approach to acquire Syngenta, they considered changing the name of the company, showing they are not married to the idea of holding the Monsanto company name at any cost,” he says. Syngenta eventually went to the state-owned China National Chemical Corp, but Monsanto might be ready to bury their name once inside the Bayer group. Regardless of the name game, Bayer has no plans to bury Monsanto’s products.

However, Condon admits he sees no way of tackling Europe’s huge resistance to GM seeds.

“GM acceptance in Europe is exceptionally low and, while we will argue for the technology, it’s something we have to accept,” he says. “We see no point in forcing anything; it would be stupid to do that.”

It’s clear that the Bayer manager sees Europe’s resistance to GM crops as Europe’s loss. He points to China’s recent five-year development plan, which has decided to encourage GM production – a massive opportunity for Bayer and Monsanto.

“They know it would be almost impossible to have food security in China without GMO, that is different to Europe,” he says. “China will be the more interesting market going forward.”

For the Irish manager, the Chinese appetite and openness to the promise of GM – and Bayer-Monsanto’s GM products – more than makes up for European scepticism.

“We won’t waste our time”, he says, trying to convince Europeans otherwise.

But the Irishman insists Bayer hasn’t given up on Europe altogether. With its bid for Monsanto, he sees tremendous possibilities for his German employer, but also for farmers to improve yields, optimise input costs and environmental sustainability footprint.

“Just increasing yields for the farmer is not enough; there has to be an advantage on return of investment,” he says. “Our value proposition otherwise won’t be compelling enough.”

Fine words for a marketing graduate but, jettisoning the management speak, what will this deal mean for a farmer in Co Cavan?

“Farmers will only pick a system or product where they can see clear advantages for themselves. It’s never about marketing or shiny packaging,” says Mr Condon. “Farmers need to see evidence and we will have to show that, otherwise they won’t choose us.”

After a punishing corporate circuit in the last few months, Bayer’s Irish marathon man has begun the race of his life. Bayer’s takeover of Monsanto will transform his division of the sprawling German company. Does he hope to remain head of the new entity if the deal goes through?

“We haven’t announced any personnel because, until now, the whole focus was getting deal done,” he says diplomatically . “In next weeks and months we will start to put together new management team.”

But does he want to lead that team, finishing the race he has begun?

“If I start a marathon,” he says, “I always want to finish.”

Position: Board member of Bayern AG and head of its crop science division, operating in 120 countries with a workforce of 21,000

Outside interests: marathons of all descriptions

Something you’d expect him to say: “The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional three billion people in the world by 2050 in an environmentally sustainable way.”

Something that might surprise: After moving to Japan in 1996, he first lived in a rural community with a host family where the mother was a beautician for the local geishas.</s>German drug and farm chemical company Bayer AG said Wednesday it has signed a deal to acquire seed and weed-killer company Monsanto for $66 billion in cash.

Bayer said it is paying Monsanto shareholders $128 per share, which represents a 44% premium over Monsanto's closing price on May 9, the day before a proposed deal was announced.

The deal is subject to approval by Monsanto shareholders and antitrust regulators.

Bayer said the transaction brings together two different but complementary companies. Bayer makes a wide range of crop protection chemicals, while Monsanto is known for its seed business.

Leverkusen-based Bayer said the merged companies' agriculture business would have its seed business and North American business headquarters in St. Louis, where Monsanto is based.

Bayer initially offered $122 per share, only to be rebuffed by Monsanto management, and then $125 per share before reaching the deal announced Wednesday.

Monsanto Chairman and CEO 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.

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

This article was originally published at 5 a.m.</s>NEW YORK — German drugs and crop chemicals company Bayer has won over U.S. seeds firm Monsanto with an improved takeover offer of around $66 billion, ending months of wrangling after increasing its bid for a third time.

The $128 a share deal, up from Bayer's previous offer of $127.50 a share, is the biggest of the year so far and the largest cash bid on record.

The deal will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.

However, competition authorities are likely to scrutinize the tie-up closely, and some of Bayer's own shareholders have been highly critical of a takeover plan which they say risks overpaying and neglecting the company's pharmaceutical business.

The transaction includes a break-fee of $2 billion that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.

The details confirm what a source close to the matter told Reuters earlier.

Bernstein Research analysts said on Tuesday they saw only a 50 percent chance of the deal winning regulatory clearance, although they cited a survey among investors that put the likelihood at 70 percent on average

"We believe political pushback to this deal, ranging from farmer dissatisfaction with all their suppliers consolidating in the face of low farm net incomes to dissatisfaction with Monsanto leaving the United States, could provide significant delays and complications," they wrote in a research note.

Bayer said it was offering a 44 percent premium to Monsanto's share price on May 9, the day before it made its first written proposal.

It plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders, and said banks had also committed to providing $57 billion of bridge financing.

Bayer's move to combine its crop chemicals business, the world's second largest after Syngenta AG, with Monsanto's industry leading seeds business, is the latest in a series of major tie-ups in the agrochemicals sector.

The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers. That was also the idea behind Monsanto's swoop on Syngenta last year, which the Swiss company fended off, only to agree later to a takeover by China's state-owned ChemChina. Elsewhere in the industry, U.S. chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness. The Bayer-Monsanto deal will be the largest ever involving a German buyer, beating Daimler's tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev's $60.4 billion offer for Anheuser-Busch in 2008.

Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal.
German chemicals company Bayer AG will announce that it has acquired American seeds company Monsanto Co. for US$66 billion.