Bayer Gets US Approval for $66-Billion Acquisition of Monsanto

On May 29, 2018, Bayer announced that it obtained conditional approval from the Antitrust Division of the United States Department of Justice (DOJ) for the acquisition of Monsanto for $66 billion. 

DOJ is requiring Bayer to divest businesses and assets collectively worth approximately $9 billion to BASF, a chemical company with a substantial crop protection business, in order to proceed with its acquisition of Monsanto. According to DOJ, under the terms of the proposed settlement, Bayer must divest Bayer businesses that compete with Monsanto, which 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. The proposed divestiture to BASF aims to resolve all horizontal and vertical competition concerns, as stated by DOJ.

“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,” said DOJ in a press 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 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.”

“This comprehensive structural solution to significant horizontal and vertical competition concerns-the largest merger divestiture ever required by the United States-preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” said Assistant Attorney General Makan Delrahim of the Antitrust Division in the press release.  “We commend the parties for working with the Antitrust Division to resolve our concerns on behalf of American consumers.”

The deal, first announced by the companies in September 2016, was also conditionally approved by the European Commission (EC) in March 2018. According to Bayer, it has also received approvals for the transaction from more than half of approximately 30 regulatory authorities, including those in Brazil and China.

Bayer 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. 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, according to Bayer.    

Sources: Bayer,US Department of Justice