Investor Handout December 2016
Cautionary Statements Regarding Forward-Looking Information Certain statements contained in this communication may constitute forward-looking statements. Actual results could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual results to differ materially include the following: the risk that Monsanto Company s ( Monsanto ) stockholders do not approve the transaction; uncertainties as to the timing of the transaction; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected time-frames or at all and to successfully integrate Monsanto s operations into those of Bayer Aktiengesellschaft ( Bayer ); such integration may be more difficult, timeconsuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; the retention of certain key employees at Monsanto; risks associated with the disruption of management s attention from ongoing business operations due to the transaction; the conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the parties ability to meet expectations regarding the timing, completion and accounting and tax treatments of the merger; the impact of indebtedness incurred by Bayer in connection with the transaction and the potential impact on the rating of indebtedness of Bayer; the effects of the business combination of Bayer and Monsanto, including the combined company s future financial condition, operating results, strategy and plans; other factors detailed in Monsanto s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the SEC ) for the fiscal year ended August 31, 2016 and Monsanto s other filings with the SEC, which are available at http://www.sec.gov and on Monsanto s website at www.monsanto.com; and other factors discussed in Bayer s public reports which are available on the Bayer website at www.bayer.com. Bayer assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Disclaimer
Additional Information and Where to Find It This communication relates to the proposed merger transaction involving Monsanto Company ( Monsanto ) and Bayer Aktiengesellschaft ( Bayer ). In connection with the proposed merger, on November 10, 2016, Monsanto filed with the U.S. Securities and Exchange Commission (the SEC ) a definitive proxy statement on Schedule 14A (the Proxy Statement ) and other documents relating to the proposed transaction and mailed the Proxy Statement and proxy card to Monsanto s stockholders. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF MONSANTO ARE URGED TO READ THE PROXY STATEMENT CAREFULLY, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain a copy of the Proxy Statement and the other documents filed with the SEC free of charge at the SEC s website, http://www.sec.gov, and Monsanto s website, www.monsanto.com. In addition, the documents may be obtained free of charge by directing a request to Corporate Secretary, Monsanto Company, 800 North Lindbergh Boulevard, St. Louis, Missouri 63167, or by calling (314) 694-8148. Participants in Solicitation Monsanto, Bayer and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Monsanto common stock in respect of the proposed transaction. Information about the directors and executive officers of Monsanto is set forth in the proxy statement for Monsanto s 2016 annual meeting of stockholders, which was filed with the SEC on December 10, 2015, and in Monsanto s Annual Report on Form 10-K for the fiscal year ended August 31, 2016, which was filed with the SEC on October 19, 2016. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the definitive proxy statement and may be contained in other relevant materials filed with the SEC in respect of the proposed transaction. Disclaimer
Building Leading Life Science Businesses to Create Value Division Leadership Position Pharmaceuticals Leading position in cardiology, hematology, radiology, women s health Consumer Health Global #1 OTC business with strong portfolio of leading brands Crop Science / Animal Health After the acquisition of Monsanto, a global leader in seeds, traits, crop protection and digital farming; #5 globally in Animal Health Page 1 Investor Handout December 5, 2016 Monsanto Acquisition - Transformative Step to Strengthen Life Science Portfolio 2015 Pro Forma Life Science Sales Crop Science Industry Leadership Creating a global leader in agriculture with an integrated agricultural offering Broad product portfolio and R&D pipeline to deliver enhanced solutions for farmers Total 47.1bn 49% combined pro forma Significant Value Creation Substantial synergy potential Accretion to core EPS in the first full year Potential for premium valuation of combined agriculture business Health care businesses 49% Excluding Covestro Monsanto sales calculated at avg. 2015 Fx rate (USD/EUR=1.11) Monsanto Consistent with Bayer s Strategy Agriculture market driven by innovation Attractive long-term growth market Building of leadership position Page 2 Investor Handout December 5, 2016
Path to Completion of the Monsanto Transaction September 14, 2016: Signing of merger agreement between Bayer and Monsanto September, 2016: Commenced discussions with regulatory agencies October 12, 2016: Closing of syndication of $57bn bank facilities; refinancing might be executed in part well in advance of expected closing November 16, 2016: Placement of 4bn mandatory convertible notes Q4 2016: Submission of regulatory filings in the US December 13, 2016: Monsanto to convene shareholder meeting to vote on merger agreement Q1 2017: Intended antitrust regulatory filing in the European Union Closing expected by the end of 2017 Page 3 Investor Handout December 5, 2016 Proven Track Record of Successful Portfolio Management Rebuilding Pharma Total transaction value Number of closed transactions Strengthening HealthCare and CropScience Transforming into a Life Science company Roche OTC Schering Stoneville Cotton Seed Athenix Conceptus Steigerwald AgraQuest Dihon Algeta Merck OTC Signing of merger agreement with Monsanto 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Lanxess Diagnostics H.C. Starck Wolff Walsrode Interventional Covestro (partial IPO) Transforming into a Life Science company total transaction value of ~ 52bn in ~130 closed deals since 2005 Diabetes Care Page 4 Investor Handout December 5, 2016
Clear Portfolio Management Criteria Drive Value Generation General Portfolio Criteria Focus on markets with long-term GDP+ growth potential Ability to generate attractive returns Success driven by innovation-based business models Potential to achieve leadership positions Bayer as the best owner Portfolio Management Approach Decisions based on regular portfolio review and market opportunity Strong DCF-based value creation imperative Key performance indicators including sales growth relative to market, core EPS accretion and value generation No capital allocation to one business at the cost of underinvestment in another business Proven integration/ separation capabilities Page 5 Investor Handout December 5, 2016 Delivering Shareholder Value Through Strong Execution 3.2 Building Leading Life Science Franchise Sales and EBITDA Margin 1 Rebuilt Pharma 20 15.3 Global Leadership in Consumer Health 5.9 10.4 1.3 30 21 24 21 ~27 2 2004 2015 2004 2015 Sales, bn EBITDA Margin, % 1 2015 figures restated, Crop Science as reported; 2 2015 pro forma combined EBITDA margin; Monsanto calendarized to December 2015 year-end; 3 From December 31, 2004 through September 13, 2016 6.1 Building a New Leader in Crop Science 23.1 12.7 Monsanto 2004 2015 + Increased market cap ~4x since 2004 3 Proven Integration Track Record Experienced acquirer having successfully integrated various multi-billion transactions Aventis CropScience Schering Roche OTC Merck & Co. Consumer Care Monsanto integration expected to be no more complex than previous large integrations Page 6 Investor Handout December 5, 2016
Consistent Track Record of Strong Operating Performance 46.1 39.7 40.2 41.3 35.1 36.5 10.3 7.1 7.6 8.3 8.4 8.7 22.3 21.0 20.8 20.2 20.8 20.9 2010 2011 2012 2013 2014 2015 4.19 4.83 5.30 5.61 5.89 6.82 CAGR 2010-2015 Sales +6% Adj. EBITDA +8% Core EPS +10% Sales ( bn) Adj. EBITDA ( bn) Adj. EBITDA margin (%) Core EPS ( ) Continued businesses for 2014/2015; 2015 figures restated Adj. EBITDA: EBITDA before special items Page 7 Investor Handout December 5, 2016 September YTD 2016 Successful Operating Performance and Strategic Progress Sales m, % FX & portf. adj. 34,800 34,949 9M 15 9M 16 +3% EBITDA before special items, m 8,340 9,123 9M 15 9M 16 +9% EBIT m 5,320 6,253 9M 15 9M 16 +18% Core EPS cont. operations, 5.74 6.15 9M 15 9M 16 +7% Highlights 9M 2016 New approvals for Kovaltry and Xofigo Patent term for Rivaroxaban extended in USA Stake in Covestro reduced to 64% Acquisition of Monsanto agreed Sale of the Consumer Business of Environmental Science completed Outlook for core EPS 2016 raised Peak sales estimate for recently launched pharma products raised to > 10 billion Mid-term aspirations emphasize attractive growth and margin potential 2015 figures restated Page 8 Investor Handout December 5, 2016
FY 2016 Forecast for core EPS Raised Sales % yoy Fx and portfolio adj., EBITDA before special items; Continuing operations 2015 2016 update October Sales Adj. EBITDA Group 46.1bn Low-single-digit % increase to 46 47bn Life Sciences 34.1bn Mid-single-digit % increase to ~ 35bn Group 10.3bn High-single-digit % increase Life Sciences 8.6bn Mid- to high-single-digit % increase Core EPS 6.82 High-single-digit % increase 2015 figures restated Assuming end Q3 2016 Fx rates (USD 1.12) Outlook depends on specific planning assumptions as detailed in the Annual Report Page 9 Investor Handout December 5, 2016 Mid-Term Aspirations Emphasize Attractive Growth and Margin Potential Sales Growth CAGR 2015-2018 Pharma ~6% Consumer Health Adjusted EBITDA Margin 2018 32-34% Despite dilution through Radiology and significant R&D investment 4-5% ~25% Animal Health 4-5% 23-24% Crop Science (incl. Monsanto)* Above market growth >30% after year 3 post closing Sales Fx & portf. adjusted, EBITDA before special items, continuing operations Outlook depends on specific planning assumptions outlined in the Interim Report Q2 2016 * Not including any potential divestments Page 10 Investor Handout December 5, 2016
Focused Leadership Strategy at Pharma to Deliver Growth and to Create Value Deliver Growth Drive Innovation Create Value Focus on key therapeutic areas and build / maintain leading positions Cardiovascular Hemophilia Women s Health Oncology Continue to maximize growth potential of Xarelto, Eylea, Xofigo, Stivarga, Adempas Build pipeline organically and pursue in-licensing and bolt-on M&A options Focus research on Cardiovascular and Oncology Foster late-stage development to fully develop high value projects Support leading positions in Hemophilia, Women s Health and Ophthalmology Deliver on mid-term growth and margin aspirations Balance margin expansion and need to invest in securing longterm growth Page 11 Investor Handout December 5, 2016 Combined Peak Sales Potential of Recently Launched Products Increased to > 10bn > 5bn > 2.5bn ~ 3.5bn 1.5bn 1bn > 1bn Old PSP Xarelto New PSP* Old PSP Eylea New PSP* Old PSP Xofigo New PSP* > 10bn 1bn 1bn 7.5bn 0.5bn > 0.5bn Old PSP Stivarga New PSP* Old PSP Adempas New PSP* Old PSP New PSP* Rec. Launched Products * PSP: peak sales potential Page 12 Investor Handout December 5, 2016
Consumer Health to Maintain Global OTC Leadership and to Improve Profitability Build Global Brands Drive Key Market Growth Accelerate Innovation Focus on categoryleading, global brands Execute brand strategies in a differentiated, country-specific approach, tailored to local market requirements Deliver growth in key markets including USA, China, Brazil, Russia Refocus investments to mature markets which are regaining momentum Continue prudent investments in emerging markets Leverage scale to grow more profitably Accelerate consumercentric innovation Create more effective innovation processes Exploit growth potential of Rx/OTC switches Build new digital capabilities Page 13 Investor Handout December 5, 2016 Broad Portfolio of Consumer Health Brands with Sales of > 100 million p.a. Each Sales FY 2015 997 million* 627 million 413 million 355 million 267 million 253 million 251 million** 218 million 211 million 162 million 159 million 158 million * including Rx Aspirin Cardio ** Alka Seltzer family 128 million 111 million 110 million Page 14 Investor Handout December 5, 2016
Combined Crop Science Company Well Positioned to Deliver Superior Performance Integrated Solutions Lead Innovation Deliver Value Proposition Create integrated agriculture offerings Fully leverage combinations and optimized usage of products based on agronomic advice and digital farming Enable integrated solutions for broad-acre crops corn and soy Advance strong pipeline across crops, indications and technologies Deploy joint innovation capabilities to deliver enhanced solutions for the next generation of farming Deliver integrated systems based on technologies optimally designed to work together Realize full synergy potential of the combined businesses Deliver above market growth and superior margins Page 15 Investor Handout December 5, 2016 Significant Strategic Benefits Due to Strong Position Along Key Criteria Scale A leading player with significant revenue base and high R&D spend Breadth Broad product portfolio across indications and crops R&D Pipeline Integrated Solutions Digital Farming Best-in-class combination of science, innovation history and R&D effort globally Combination of the high-quality seeds & traits and crop protection pipelines across key crops Ability to provide farmers with integrated solutions immediately and into the future Opportunity to create a global leader by combining strengths of both organizations in digital farming Page 16 Investor Handout December 5, 2016
Confidence in Our R&D Investments R&D 2016e: ~ 4.5bn Achievements Pharma 58% 25% 3% 6% Crop Science Animal Health Covestro 6% Recon. 2% Consumer Health 55 projects in clinical development at Pharma 30 successful phase III clinical trials at Pharma since 2010 Strengthened brands through multiple line or product introductions at Consumer Health Launched 12 active ingredients between 2006 and 2016 at Crop Science New product introductions at Animal Health (Seresto, Zelnate / Victrio) Page 17 Investor Handout December 5, 2016 Increased R&D Spending at Pharma - Significant Investment in Life Cycle Management 2015 R&D Investment at Pharma Research Life Cycle Management billion; R&D as % of sales ~16.8 ~20% 15.7 ~2.7 2,402m ~45% 15.8 1.8 14.6 13.5 1.7 1.7 13.9 1.8 14.7 2.0 2.4 ~35% Development 2010 2011 2012 2013 2014 2015 2016e Pharma including Radiology Page 18 Investor Handout December 5, 2016
Key Pharma Pipeline Assets With Combined Peak Sales Potential of 6 billion Pipeline Project Indication Peak Sales Potential Vericiguat 1 Worsening chronic heart failure ~ 0.5bn Finerenone Diabetic kidney disease 1.0bn Vilaprisan Uterine fibroids 1.0bn BAY-1841788 (ODM-201) Non-metastatic castration-resistant prostate cancer Metastatic hormone-sensitive prostate cancer 1.0bn Anetumab Various cancers 2 2.0bn Copanlisib Lymphoma 0.5bn 1) In cooperation with Merck & Co. 2) Ovarian, Mesothelioma, etc. Page 19 Investor Handout December 5, 2016 New Product and Life Cycle Management Launches Planned at Pharma Xarelto LCM MACE ESUS CHF Med. ill Copanlisib Lymphoma Xofigo combo Damoctocog alpha Anetumab Cancer Xarelto LCM ACS dual Amikacin inhale ODM-201 nmcrpc Xarelto LCM PAD Vericiguat WCHF Riociguat Syst. Sclerosis Anetumab Cancer Stivarga HCC 2L Visanne Endo Tedizolide Finerenone DKD Vilaprisan UF Xofigo Breast ODM-201 mhspc 2017 2018 2019 2020 2021 2022 2023 First expected launches in first countries; Eylea Life Cycle Management not included Selection of projects, regional and small projects not shown; Launches subject to successful clinical development and regulatory approval Page 20 Investor Handout December 5, 2016
Bayer A World-Class Life Science Company Value- Creating Portfolio Management Creating a global leader in agriculture through acquisition of Monsanto Proven integration/separation capabilities Track record of delivering shareholder value through successful portfolio management Continuous Prosperous Performance Excellence in Innovation to Foster Future Growth Mid-term aspirations emphasize growth and margin potential Pharma launch products expected to drive growth; PSP increased to > 10bn Consumer health challenges addressed Crop Science expected to benefit from cyclical market upswing and long-term GDP+ growth potential Upcoming new product launches and LCM at Pharma expected to mitigate LoE post 2023 Combined PSP of key late-stage Pharma pipeline assets 6bn Consumer Health delivering steady stream of consumer-centric innovations Strong R&D capabilities at combined Crop Science business LCM: Life Cycle Management; LoE: Loss of exclusivity; PSP: Peak sales potential Page 21 Investor Handout December 5, 2016
Date Event Publication Wednesday, February 22, 2017 Thursday, April 27, 2017 Friday, April 28, 2017 Thursday, July 27, 2017 Thursday, October 26, 2017 Investor Conference Call Investor Conference Call Annual Stockholders Meeting Investor Conference Call Investor Conference Call 2016 Annual Report Q1 2017 Interim Report Q2 2017 Interim Report Q3 2017 Interim Report Reporting Events
Dr. Jürgen Beunink Phone: +49-214-30-65742 E-mail: juergen.beunink@bayer.com Peter Dahlhoff Phone: +49-214-30-33022 E-mail: peter.dahlhoff@bayer.com Judith Nestmann Phone: +49-214-30-66836 E-mail: judith.nestmann@bayer.com Constance Spitzer Phone: +49-214-30-33021 E-mail: constance.spitzer@bayer.com Prof. Dr. Olaf Weber Phone: +49-214-30-33567 E-mail: olaf.weber@bayer.com Contacts