
Monsanto Posts Earnings Miss Amid 'Unforeseen Level of Challenges'
Agriculture products and seeds producer Monsanto (MON) posted fiscal third-quarter earnings of $2.17 a share on revenue of $4.19 billion, missing analysts' estimates and undermining its claim that a $66 billion bid from Bayer was too cheap.
The results were well below expectations for the St. Louis-based group, with analysts tipping earnings per share of about $2.40 on revenue of about $4.49 billion ahead of the announcement. Despite the miss, shares appeared likely to open higher as investors took heart after Chairman and CEO Hugh Grant said he had been in talks with both Bayer and possible rival bidders. Monsanto shares rose slightly in premarket trading.
"Our industry is running at a low point in the overall agriculture cycle and we've experienced an unforeseen level of challenges affecting our business in fiscal year 2016," Grant said in a statement.
The quarterly results are a blow to Monsanto's efforts to negotiate a higher bid from Bayer, which last month offered $122 a share, equivalent to an enterprise value of $62 billion including $8.3 billion of net debt. Monsanto dismissed that offer as too low but said it was willing to discuss terms.
"I have been personally in discussions with Bayer's management over the last several weeks, along with others regarding alternative strategic options," added Grant. "We continue to recognize the potential value of these types of combinations can create ... that is why we remain open and will continue to actively engage in constructive dialogue."
The German bidder's willingness to increase its bid may have already been tempered by a recent dip in its own share price and a fall in the euro against the dollar following the British vote to leave the European Union. Bayer plans to fund 25% of the bid by selling shares, while the bulk of the cash will be raised using dollar-denominated debt.
Bayer traded Wednesday early afternoon in Frankfurt at €89.84 a share, up €0.46 or 0.5% on their Tuesday close, but remains down about 3% since last Thursday, the day before the British vote on the EU. Bayer stock has fallen 20% since rumors of its bid for Monsanto first emerged. The euro has also fallen in the wake of the British vote, trading at $1.10, down 1.8% from its price of $1.12 on May 25, when the offer for Monsanto was made public.
Monsanto's third-quarter results continue the group's run of disappointing quarterly figures after its second-quarter earnings also missed analysts' estimates. The company has been hurt by falling sales of corn and soybean seeds and traits following three years of bumper U.S. crops that have pushed down prices and left farm incomes on track to hit their lowest level since 2002.
Monsanto will pay a third-quarter dividend of 54 cents a share.









