MON

Publicly traded companies mentioned herein: BASF SE (BAS GR), Bayer AG (BAY GR), Dow Chemical Co (DOW), EI du Pont de Nemours & Co (DD), Monsanto Company (MON), Syngenta AG (SYT)

Highlights

Shares of Monsanto (MON) have traded between $105 and $113 since Bayer made the all-cash, $122 per share ($62 billion) offer to buy the company. The presenter is long the stock, and sees ~$109 - $110 as a good entry point. He noted that Bayer’s offer is just slightly above MON’s 52-week high of $115.45, but appears to be timely given the recent pressure on commodity and agriculture stocks as underlying commodities faced weakness (most notably, corn and soybeans have been under pressure over the last 6 - 9 months). He believes MON’s response was a surprise to the market, as their willingness to undertake a conversation/ negotiation was conveyed in a relatively “friendly” press release in the context of an unsolicited proposal. If $122 is the starting point for the negotiation the risk/ reward is favorable, and if Bayer is as committed to getting a deal done as it seems the final offer could fall in the $135 - $140 price range.