Bayer AG announced a €6 billion cash call to help fund its $62.5 billion acquisition of Monsanto Co., the world's top seed supplier, and said it will retire the Monsanto name upon completion in the next few days.
Bayer will issue nearly 75 million new shares to existing investors at €81 each. Stockholders can acquire two new shares for every 23 Bayer shares they hold, resulting in expected gross proceeds of €6 billion. The German agrochemical giant is also planning senior bond issuances in U.S. dollars and euros, with an expected total volume of up to €20 billion, according to a company statement.
The much anticipated rights issue represents a 21% discount to Bayer's June 1 closing stock price, Jefferies analysts said in a report.
Bayer intends to use the net proceeds from this transaction and from the bond issues to repay amounts drawn under the syndicated loan facilities agreement for the Monsanto acquisition. "It is a significant component of the financing for the acquisition of Monsanto and the final equity measure associated with this undertaking," Bayer Chairman Werner Baumann said in a statement.
The subscription period is expected to run June 6-19, at which point any unsubscribed shares will be offered for sale to eligible institutional investors in a private placement for a price at least equal to the subscription price.
The offering is being underwritten by a consortium of 20 banks, with BofA Merrill Lynch and Credit Suisse acting as joint global coordinators.
The announcement comes just days after the U.S. Department of Justice granted conditional approval for the acquisition. Bayer said June 4 that it plans to complete the acquisition June 7, adding that Monsanto will no longer be a company name but the acquired products will retain their brand names under the Bayer portfolio.
Bayer shares were little changed at €103.32 apiece, down 0.56% as of 4:40 a.m. ET.
