Bayer’s $62 billion all-cash offer for Monsanto was publicly disclosed earlier today. My five thoughts on the proposed transaction, in no particular order:
Point #1: Monsanto’s growth has come entirely from buybacks of late.
In 2012, Monsanto made profits of just a hair under $2 billion. In 2016, Monsanto is on pace to make a little bit over $2 billion. Specifically, the change is from $1.997 billion to $2.0250 billion, for a cumulative growth rate of 1.40%. And yet, Monsanto has covered up some of this core business stagnation by taking on enormous sums of debt in recent years to retire shares and boost the earnings per share.