LONDON/BERLIN German chemicals and healthcare group Bayer AG (BAYGn.DE) is selling 4 billion euros ($4.3 billion) worth of mandatory convertible notes to help fund its proposed acquisition of U.S. seeds company Monsanto Co (MON.N).
The issue will be the largest ever mandatory convertible bond for a European issuer and the largest European equity capital markets (ECM) deal in 2016, which has proved a volatile year for markets, leading to the cancellation or delay of several initial public offerings in Europe in recent weeks.
Bayer said in a statement on Tuesday that issuing the notes, which convert on Nov. 22, 2019, is the first part of its previously announced plan to raise $19 billion in equity capital to help finance the $66 billion Monsanto deal, which still has to be cleared by the regulatory authorities in the United States, Europe and elsewhere.
A banker working on the convertible issue, code-named "Mercury", said a mixture of long-only investors and hedge funds were expected to subscribe and the sale was covered in an accelerated bookbuild which is due to be finalised on Wednesday.
"The shares had rallied post (U.S.) election. There is a depth of market support for financing the acquisition," he added.
Bayer's shares have risen 6.6 percent to 94.78 euros since Donald Trump was elected president last week, calming investors' fears that tough action would be taken on drug pricing in the United States.
Joint global coordinators and joint bookrunners for the offer are Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs and JP Morgan.
(Editing by Ruth Pitchford, Greg Mahlich)