Argus Is Bullish On Monsanto Regardless Of Merger Talk Outcome

Argus’ Bill Selesky believes Monsanto Company MON “continues to offer significant value to long-term investors, either as part of a larger conglomerate or as a standalone company.”

Selesky maintains a Buy rating on the company, while raising the price target from $111 to $128.

Well Positioned

“Despite current low prices for agricultural commodities, we believe that Monsanto is well positioned to benefit from steadily increasing global demand for food thanks to its size, scale, and robust R&D pipeline,” the analyst mentioned.

Related Link: UBS Optimistic On Monsanto Deal, Raises Price Target To Match Bayer Bid

The company’s products have a robust track record of improving agricultural productivity, as well as saving money and time for producers, Selesky noted.

The analyst expects this trend to continue, regardless of whether Monsanto continues to be a standalone company or merges with Bayer AG (ADR) BAYRY.

The Acquisition Offer

Monsanto had received an unsolicited bid from Bayer on May 18, which valued the former company at $62 billion or $122 per share and represented a 25 percent premium to Monsanto’s closing price before the bid.

According to the Argus report, “Monsanto rejected the Bayer proposal as “incomplete and financially inadequate” on May 24, but agreed to further talks and acknowledged the potential benefits of an alliance with Bayer.”

Selesky believes the acquisition made strategic sense for Bayer, since it would make the company the largest supplier of farm chemicals and seeds in the world, significantly expanding its presence in the Asia-Pacific, Europe and the Americas.