The most disputed deal between the Germany-based chemical giant Bayer and the U.S.-based Monsanto received a nod from the U.S. Department of Justice. If the merger is consummated it would be one of the biggest mergers of the year.
Shares of the St. Louis, Missouri-based agro giant rallied up 6% yesterday on this news. According to reports by The Wall Street Journal, the U.S. DOJ sanctioned the union after Bayer complied to unload certain additional assets in order to address the anti-trust concerns. However, it is not known when the DOJ’s investigation of this deal would formally end.
After months of off-and-on of deal-making, when Monsanto finally agreed to be purchased by Bayer in 2016 for a huge price tag of about $66 billion, there were protests made by environmental groups and farmers who slammed the tie-up due to concerns on market power and advantage in digital farming data the merged company would have. The proposed merger even underwent intense scrutiny by regulators in both Europe and the U.S.
But after both the companies agreed to sell a group of its assets to German rival BASF, the deal got an OKAY from the European Union antitrust regulators in March 2018. Apart from this, Australia, Brazil, and China have also approved the union of the two companies. Other major agri industry deals that happened in 2017 include the merger of Dow-Dupont (DWDP) valued at $130 billion and Syngenta-ChemChina’s $43 billion deal.
Last month, the DOJ said that it was still in the process of reviewing the deal and highlighted the fact that, in Europe the use of genetically altered seeds are prohibited whereas the same product has a huge demand in the U.S. This could not only hurt consumers but will also make it difficult for the American farmers to compete with the European farmers.
Shares of the St. Louis, Missouri-based agro giant rallied up 6% yesterday on this news
To this end, Bayer agreed to even sell some of its assets related to seed treatment. It is said that BASF would be snatching those assets from Bayer including the assets the company sold to win EU approval. The company has also agreed to make some allowances related to digital agriculture.
If Bayer succeeds to swallow Monsanto, despite a huge outcry, the merger would give rise to a company that would have a huge share of more than one-fourth of the world’s seed and pesticide market.