Thu, May 31, 2018 page10

• Bayer agrees to sell assets ahead of Monsanto merger

  LARGEST SUPPLIER: Bayer is to sell some assets, such as vegetable oils and seed treatments, to BASF to ensure competition and innovation in the industry

  • AP, WASHINGTON
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  German pharmaceutical giant Bayer AG has agreed to the US government’s demand that it sell about US$9 billion in agriculture businesses as the condition for acquiring Monsanto Co, a US seed and herbicide maker.

  Antitrust regulators at the US Department of Justice have said it is the biggest divestiture ever required for a merger.

  The regulators said they directed Bayer to divest assets, such as vegetable oils, seeds and seed treatments, to ensure fair competition, and prevent price spikes after the massive agriculture business deal goes through.

  

  A protester wearing a pill-shaped costume bearing the logos of Bayer AG and Monsanto Co takes part in a demonstration against the takeover of US seeds and pesticides maker Monsanto by Bayer outside the World Conference Center where the German company was holding its general meeting in Bonn on Friday last week.

  Photo: AFP

  The assets are to be sold to BASF AG, a German chemical company.

  “As a result, American farmers and consumers will continue to benefit from competition in this industry,” the department said in a statement.

  Without the sale of Bayer assets, the merger of two of the world’s largest agricultural companies “would likely result in higher prices, lower quality and fewer choices across a wide array of seed and crop-protection products,” the statement said.

  “The merger also threatened to stifle the innovation in agricultural technologies that has delivered significant benefits to American farmers and consumers,” it added.

  Monsanto, based in St Louis, Missouri, is one of the world’s biggest seed companies.

  The US$57 billion merger would make Bayer the largest supplier in the world of pesticides and seeds for farmers.

  The divestiture proposal is to be filed in US federal court and opened to public comment for 60 days.

  In March, the EU approved the merger on condition that Bayer sell US$7.4 billion in assets to BASF to eliminate overlaps in seed and pesticide markets.

  The department said after the European action that it continued to have concerns over the proposed deal, especially its potential effects on US farmers and consumers, which could differ from its effects in Europe.

  Genetically modified seeds, for example, are used widely in the US, but mostly banned in Europe.

  The merger also has won approval from China, Brazil and Australia.

  Bayer said it has secured nearly all the needed government clearances for closing the deal.

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

  According to the new US agreement, Bayer must divest:

  ‧ Businesses that compete with Monsanto, including its cotton, canola, soybean and vegetable seed businesses, and its Liberty herbicide business, a key rival of Monsanto’s Roundup herbicide.

  ‧ Certain intellectual property and research capabilities for developing new products.

  ‧ Assets needed to ensure that BASF has the same incentives to innovate that Bayer would have as an independent competitor, including Bayer’s early stage “digital agriculture” business.
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