US seed firm’s shares shoot up after boosts for biggest deal of 2016
US seed company Monsanto’s share price shot up today as the chances of a takeover by German chemical giant Bayer appeared to improve.
It was today reported that the chief executives of both firms have had a series of constructive meetings in recent weeks.
And a top 20 Bayer shareholder told City PM they thought the deal’s chances of completion have been improved after the US authorities cleared ChemChina’s takeover of Syngenta on Monday.
Read more: Biggest deal of 2016 expected to turn hostile if no agreement is found
Markus Manns, a portfolio manager at Union Investment, said the ruling was a “major milestone” for Bayer and Monsanto.
He said: “First of all, it reduces the uncertainty – because it is more likely that the Bayer-Monsanto deal will also not be blocked.
“The second point is that it removes a big option for Monsanto. This option was if Syngenta and ChemChina had failed, then Monsanto would have had a second opportunity to look at, and maybe merge with or buy, Monsanto. That option is probably now gone.”
Monsanto’s share price, which shot up from below $90 to $100 when Bayer’s interest first emerged earlier this year, was up three per cent yesterday to $108.
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Read more: How shareholders feel about Bayer's "determined" pursuit of Monsanto
Both Bayer and Monsanto declined to comment on reports that their chief executives are making progress with the deal.
People familiar with the matter told Bloomberg an agreement could be reached within the next two weeks. It is also thought, however, that negotiations could still fall apart or be delayed.
There were reports in the German press last week that Bayer was willing to turn its takeover approach hostile.
Monsanto has rejected two offers, the second totalling around $64bn, from Bayer in recent months