Bayer has won US approval for its planned takeover of Monsanto, after agreeing to sell about $9 billion in assets, clearing a major hurdle for the $62.5 billion deal that will create, by far, the largest seed- and pesticide-maker.
Makan Delrahim, who heads the US Justice Department's (DoJ) Antitrust Division, said that the asset sales agreed by Bayer were the "largest-ever divestiture ever required by the United States".
A Bayer spokesman said that the planned sale of businesses with €2.2 billion ($2.54 billion) in sales to German chemical company BASF – already agreed to address antitrust concerns, mainly in Europe – were not materially different from the DoJ's demands.
"Receipt of the DOJ's approval brings us close to our goal of creating a leading company in agriculture," Bayer CEO Werner Baumann said in a statement.
Shares Jump
Shares in Bayer jumped to the top of Germany's DAX index early Wednesday, with trading up by 2.8%, at €101.6, by 08.33 GMT.
Bernstein analysts said that the DoJ approval made it possible for Bayer to close the Monsanto deal by the end of June.
After months of delays in a drawn-out review process, the ruling brings Bayer close to creating an agricultural supplies giant, with sales of about €20 billion (based on 2017 figures), when taking into account the divestments.
At current foreign-exchange rates, that compares to about €12.4 billion at DowDuPont's Corteva Agriscience unit, €11 billion at ChemChina's Syngenta, and €7.9 billion at BASF, including businesses to be acquired.
Agrochemical Tie-Ups
Bayer's move to combine its crop chemicals business – the world's second largest, after Syngenta AG – with Monsanto's industry-leading seeds business, is the latest in a series of major agrochemicals tie-ups.
US chemical giants Dow Chemical and DuPont merged in September 2017 and are now in the process of splitting into three units. In other consolidation in the sector, China's state-owned ChemChina purchased Syngenta, and two huge Canadian fertiliser producers merged to form a new company, now called Nutrien.
Bayer committed to selling its entire 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 antitrust enforcers, Bayer agreed to sell assets with revenues of €2.2 billion ($2.6 billion) to rival BASF for €7.6 billion.
Bayer said that it expected Monsanto and its own company to begin the integration process as soon as the sales to BASF are completed, expected to take two months.
If Bayer does not close the deal by 14 June, Monsanto could withdraw from the takeover agreement and seek a higher price.
It has already secured the go-ahead from key jurisdictions, including the European Union, Brazil and Russia. Apart from the United States, it still needs clearance in Canada and Mexico.
BASF Approved
In a separate statement, on Tuesday Bayer said that the European Commission had approved BASF as a suitable buyer of the businesses to be divested.
On Wednesday, German seed-seller KWS Saat, which made an eleventh-hour bid for Bayer's vegetable seed business, said that it had accepted the Commission's decision.
Last week, Bayer said that synergies from folding Monsanto into its organisation would be about $300 million below its previous target because it will have to sell more businesses than initially expected.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
