Bayer’s share price jumped two per cent today after the company announced it was in “advanced” talks to acquire US seeds firm Monsanto.
The German chemicals giant’s bid now stands $127.50 per share, or around $65bn (£49bn). This is an improvement on previous offers of $122 and $125, which have been rejected by Monsanto.
But the US firm said in a statement on Monday that it was “engaged in constructive negotiations”.
Markus Manns, a portfolio manager at top 20 shareholder Union Investment, told City A.M. any deal below $130 per share would be “very positive”, with $135 acceptable. He said that anything above $140 would be “very bad”.
Manns added that the latest statement from Bayer looked like a “sign they’re making progress” with the deal.
Andrea Williams, a senior fund manager at Bayer shareholder Royal London Asset Management, said she would be “delighted” if Monsanto agreed to the deal at $127.50, but believes the Germans will have to improve the offer further.
She told City A.M. Royal London would accept an offer of between $130-135 per share.
This generosity may be needed. Two unnamed Monsanto investors told the Financial Times they would like an offer of more than $130.
The offer was not welcomed by all Bayer shareholders, however. Henderson Global Investors is opposed to the German company’s pursuit, having previously said the potential takeover has “called into question… the strength of Bayer as a long term investment”.
And today, fund manager John Bennett told Reuters: “Bayer have backed themselves into a corner. The money would have been better spent buying their own stock. Alas, for shareholders, it was not to be.”
Michael Jewell, healthcare partner at Cavendish Corporate Finance, commented: “We should not exclude the possibility of Bayer increasing its bid if the deal is once again turned down.”
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