M&A Watch: Bayer and Monsanto Receive U.S. Merger Approval


Bayer and Monsanto merger agreement September 2016

Bayer and Monsanto have passed the last major hurdle in their nearly two-year bid to merge, with the U.S. government today approving Bayer’s plan to divest assets in order to acquire Monsanto.

The companies announced their intention to merge in September 2016 and create “a global leader in agriculture.” The EU conditionally approved the merger in March, and Monsanto expressed optimism a month later that the deal would pass all necessary regulatory hurdles for approval. The U.S. Department of Justice approval was reached in principle last month provided that Bayer sell some assets, with BASF being named as the beneficiary of that divestment.

Today Bayer, as the acquirer of Monsanto, confirmed that the U.S. DOJ has approved its plan to sell $9 billion in agriculture assets to BASF to allow its Monsanto purchase, marking the biggest ever antitrust divestiture in U.S. history.

The divestiture required by U.S. antitrust enforcers “aligns closely” with divestitures the European Union required, a source knowledgeable about the agreement between Bayer and the U.S. government told Reuters.

In agreements with global antitrust enforcers, Bayer committed to sell its cotton, canola, soybean and vegetable seeds businesses and digital farming business, as well its Liberty herbicide, which competes with Monsanto’s Roundup.

Under agreements with European and other regulatory agencies, Bayer agreed to sell assets that include its seed and crop chemicals activities (with revenues of 2.2 billion euros or US$2.6 billion) to rival BASF for 7.6 billion euros or US$8.8 billion.

The German pharmaceuticals and life sciences company had said it was on track to wrap up the deal soon. If it is not closed by June 14, Monsanto could withdraw from the takeover agreement and seek a higher price, a scenario that is seen as highly unlikely to happen.

The merged company will compete with not only BASF but also DowDuPont Inc., the American company formed by the merger of Dow Chemical and DuPont in August 2017. Dow and DuPont merged with the goal of creating three independent, industry-leading companies including Corteva Agriscience.


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