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DOJ approves Bayer-Monsanto merger

Updated: Businesses being divested include research platform for wheat hybrids.

Updated 8:50 a.m. May 30.

Bayer obtained conditional approval from the Antitrust Division of the United States Department of Justice for the proposed acquisition of Monsanto today.

“Receipt of the DOJ’s approval brings us close to our goal of creating a leading company in agriculture,” said Bayer CEO Werner Baumann. “We want to help farmers across the world grow more nutritious food in a more sustainable way.”

Bayer has now obtained almost all clearances which are conditions for closing the transaction. The company expects to receive any outstanding approvals required for completing the transaction very shortly.

Bayer will become the sole shareholder of Monsanto Company 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. 

The businesses being divested include the global vegetable seeds business, certain seed treatment products, the research platform for wheat hybrids and certain glyphosate-based herbicides in Europe that are predominantly used in industrial applications. In addition, three research projects in the field of total herbicides and Bayer’s digital farming business will also be transferred. In return, Bayer will receive a back license for certain digital farming applications.

Source: Bayer

Justice Department statement on the proposed merger

The Department of Justice is requiring Bayer AG to divest businesses and assets collectively worth approximately $9 billion in order to proceed with its proposed $66 billion acquisition of Monsanto Company.  The proposed divestiture to BASF fully resolve all horizontal and vertical competition concerns.

“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.  “We commend the parties for working with the Antitrust Division to resolve our concerns on behalf of American consumers.”

The Department’s Antitrust Division today filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed transaction while simultaneously filing a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns. 

Without the agreed-to divestitures, the proposed merger would likely result in higher prices, lower quality, and fewer choices across a wide array of seed and crop protection products.  The merger also threatened to stifle the innovation in agricultural technologies that has delivered significant benefits to American farmers and consumers.

Terms of agreement

Under the terms of the proposed settlement, Bayer must divest those 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. 

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.  Additionally, because Bayer and Monsanto 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.

Comments accepted

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Kathleen S. O’Neill, Chief, Transportation, Energy & Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C.  20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

The Complaint can be found here.

The Stipulation and Order can be found here.

The Proposed Final Judgment can be found here.

The Competitive Impact Statement can be found here.

The Explanation of Consent Decree Procedures can be found here.

Source: DOJ

What others are saying:

“Bayer’s acquisition of Monsanto culminates the latest and most disturbing round of consolidation amongst the handful of companies that control both U.S. and global agricultural markets,” said National Farmers Union President Roger Johnson. “Three massive companies now control the markets that supply agricultural inputs like seeds, traits and chemicals. This extreme consolidation drives up costs for farmers and it limits their choice of products in the marketplace. It also reduces the incentive for the remaining agricultural input giants to compete and innovate through research and development.

“While we appreciate the significant divestitures agreed to as part of this approval, Farmers Union condemns DOJ’s continued rubber-stamping of mergers in the food and agriculture arena,” Johnson continued. We will now focus our efforts on ensuring the promises made by Bayer and Monsanto throughout this approval process are kept. The company must continue to increase the productivity of American family farmers by delivering localized solutions in seed, trait, and crop chemical innovation.”

Source: National Farmers Union

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