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Pro Analysis

BreakingViews: Germany's Bayer closes in on Monsanto

Werner Baumann, CEO of Bayer
Wolfgang Rattay | Reuters
Werner Baumann, CEO of Bayer

Bayer is so intent on being the world's biggest agricultural supplier that it long ago forgot about creating value for its own investors. The German pharmaceutical group raised its takeover approach to Monsanto to $127.50 per share on Sept. 6, marking its third attempt at taking over the U.S. seed maker. Hugh Grant, Monsanto's boss, must realize by now that the tendrils are closing around him.

At $65 billion including debt, Bayer's offer is generous to a fault. A 41 percent premium to Monsanto's pre-approach share price, it's also equivalent to 16 times forecast EBITDA for 2017 after including Monsanto's net debt, the same as what rival Syngenta accepted from Chinese suitor ChemChina. All this for a company that missed consensus earnings forecasts for the past two quarters.