Bayer (BAYN) offered one of, if not the, biggest offers yet to take over a foreign company when it offered Monsanto (MON) $40 billion. The offer is being seen as a slap in the face by many investors.
The offer is a 10% premium over the market cap for the company.
Before commodities prices fell in 2014, Monsanto was granted a $60 billion value, too. Analysts argue that the offer is unfair due to Monsanto’s true value potential likely over the $40 billion mark, despite the company’s market cap slumping from nearly $65 billion in mid-2014 to around $43 billion in 2016.
Monsanto owns several innovative products that have the potential to generate $1 billion each, including Nemastrike, BioDirect and its Integrated Farming System, to name a few. Monsanto has a lot of future potential, but the offer from Bayer isn’t all that insulting, as $40 billion is a lot based on product potential alone.
Analysts agree that Monsanto would do better to wait out its current slump and continue to develop its products than to take the $40 billion offer.
There is also the question of whether Bayer would be able to withstand the immense debt the company would need to take on to complete its pursuit. Bayer’s deal may be too financially complex given the company’s current position, and the deal may be too low for Monsanto to bite, but it has boosted Monsanto’s stock 5% on Thursday as a result.
