Bayer Gets Conditional US OK for $66-Billion Acquisition of Monsanto
Bayer has obtained approval from the Antitrust Division of the US Department of Justice (DOJ) for its proposed $66-billion acquisition of Monsanto, an agrochemical and seed company, conditioned upon certain divestments worth up to $9 billion.
This move to acquire Monsanto is Bayer’s first large-scale acquisition since becoming a pure-play life-sciences company with a focus on pharmaceuticals, crop science, and consumer healthcare. The companies first announced the deal in September 2016 and have been working to close the deal with regulatory approvals in various countries. In March 2018, the European Commission conditionally approved Bayer’s proposed acquisition of Monsanto.
As a condition for approving the deal, the DOJ is requiring Bayer divest businesses and assets collectively worth approximately $9 billion for Bayer businesses that compete with Monsanto. These include Bayer’s cotton, canola, soybean, and vegetable seed businesses, as well as Bayer’s Liberty herbicide business, a competitor of Monsanto’s Roundup herbicide. Earlier in May 2018, Bayer agreed to sell additional crop science businesses to BASF for up to EUR 1.7 billion ($2 billion), following a 2017 sale agreement between the companies. According to the DOJ’s conditional approval, the integration of Monsanto into Bayer can take place as soon as the divestments to BASF have been accomplished. This is expected to be in approximately two months.
“The settlement also requires structural divestitures to remedy the competitive harm that would result from the vertical integration of certain significant Bayer seed treatment businesses with Monsanto’s leading seed businesses,” the DOJ said in a May 29, 2018 statement. “Additionally, because Bayer and Monsanto currently compete to develop new products and services, the settlement requires the divestiture of certain intellectual property and research capabilities, including ‘pipeline’ R&D [research and development] projects. Finally, in order to fully prevent competitive harm from the merger, the settlement requires the divestiture of additional complementary assets that are needed to ensure that BASF has the same innovation incentives, capabilities and scale that Bayer would have as an independent competitor including, most notably, Bayer’s nascent ‘digital agriculture’ business.”
Bayer says it has now obtained almost all clearances, which are conditions for closing the transaction. The company says it expects to receive any outstanding approvals required for completing the transaction shortly. Bayer will become the sole shareholder of Monsanto following the receipt of outstanding approvals.