LONDON/FRANKFURT (Reuters) - Bayer's takeover approach for U.S. rival Monsanto triggered an investor backlash on Friday, with one of the German pesticides and drugs company's major shareholders calling it "arrogant empire-building".Investors are nursing losses after an 8.2 percent fall in Bayer's share price following news of its bid, which John Bennett of Henderson Global Investors, described as an "immediate destruction" of shareholder value.U.S. seeds group Monsanto on Thursday said Bayer, led by recently appointed Chief Executive Werner Baumann, had made an unsolicited takeover proposal to create the world's biggest agricultural supplier.Bennett, in emailed comments to Reuters, said he was furious that Bayer had not engaged with him over the approach. He said that the "fine work" of Baumann's predecessor Marijn Dekkers had been "ripped up".A Bayer spokesman declined to comment, pointing only to the company's statement on Thursday that it would make further statements as appropriate.As CEO, Dekkers had initiated a separation of Bayer's foam chemicals and transparent plastics business, Covestro, focusing Bayer on human, animal and plant health."I had hoped that the days of such arrogant empire-building and ignorance of the actual owners of the business were at an end," Bennett said. Bennett's comments mark the most scathing attack yet on Bayer in a chorus of investor discontent mainly over the sheer size of the proposed deal. Frankfurt-based Union Investment fund manager Markus Manns said he was skeptical of the merits of the takeover, in a telephone interview with Reuters on Friday.While he saw strategic value in adding a large seeds business to Bayer's crop chemicals unit, the size of the deal would stretch Bayer's finances too much, he said."With a presumptive premium of 30 to 40 percent it would be quite a chunk," Manns said, when based on Monsanto's share price of about $90 before there was speculation about a bid.His comments echo those of UBS GAM fund manager Maximillian Anderl on Thursday, who said he would prefer to see a joint venture or nil-premium merger.Berenberg analyst Alistair Campbell said Bayer's share price slump could hit the profit per share of the combined group as more Bayer shares would be needed to satisfy Monsanto investors in a share and cash deal.The dilutive effect could be up to 10 percent by 2020, depending on deal terms, he said. "We have struggled to find investors who favor this transaction," Campbell said. Bayer shares rebounded somewhat on Friday and closed 1.2 percent higher.Sources have said Bayer proposed to pay Monsanto shareholders with cash and stock, though the exact terms of any bid remained unclear.Bayer would also risk neglecting its successful core business of pharmaceuticals, driven by sales of stroke prevention pill Xarelto and anti-blindness drug Eylea, and alienate its healthcare-focused investors and analysts. "Bayer's pharma business is in excellent health today, but the clock is ticking regarding rebuilding its pipeline and recent newsflow has been disappointing," Campbell said.In April, Bayer stopped targeting chronic heart failure as a possible market opportunity for finerenone, an experimental diabetic kidney disease treatment, considered as one of the most promising drugs in its development pipeline."After a Monsanto deal it can largely be ruled out for Bayer to retain the financial flexibility over the next two to three years for acquisitions in the pharma market," Union Investment's Manns said. (Editing by Alexander Smith and Jane Merriman)
