NEW YORK (TheStreet) -- Shares of Monsanto (MON) were decreasing in mid-afternoon trading on Friday as Citigroup analysts said the St. Louis-based agricultural products supplier was "left with little choice but to accept" Bayer's (BAYRY) $66 billion offer, according to Barron's.
Earlier this week, the German chemical and pharmaceutical company agreed to acquire Monsanto for $128 per share in an all-cash deal. The companies expect the deal to close at the end of 2017.
The firm said Monsanto has historically been positioned as a leader in seeds and traits with "best-in-class" technology in precision agriculture, data analytics and advisory services. Together, these things made Citigroup believe Monsanto would be "an acquirer and not the acquired."
"We also think Monsanto management was negotiating from weaker footing after having lowered its guidance and delayed its long-term EPS goal," Citigroup said in an analyst note, Barron's reports. "But our conclusion is that Monsanto was left with little choice due to the time value of money, as we think it would have taken Monsanto 2-3 years to get to a $128 share price given the current agriculture conditions."
Citigroup added that they believe the company couldn't ignore the all-cash offer and that it was a business decision driven by the board.
The firm expects Monsanto to report 2016 and 2017 earnings of $4.40 per share and $5.00 per share, respectively.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate Monsanto as a Hold with a ratings score of C+. The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, it also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.You can view the full analysis from the report here: MON