The merger of Bayer and Monsanto is going to happen. That is the latest from the Department of Justice on the $65 billion deal. But, there are conditions.
It is a remarkable time. We recently watched Dow and DuPont merge and the name DuPont disappear. Now, in the Bayer takeover, the name Monsanto will be no longer.
The winner in this may be BASF, a long time Ag chemical company that bought the majority of American Cyanamid’s Ag lineup years ago. They will pay $9 billion for products from both Bayer and Monsanto that would have let the merged company have too much market share.
Many feel the combination is leading to monopoly in crop protection, seed and biotechnology. An update and overview in the program below.
AUDIO: Profit Matters 5-30-18
Here is what we know about Bayer and Monsanto finalizing their merger in the United States.
The U.S. Department of Justice (DOJ) Tuesday approved Bayer Ag’s acquisition of Monsanto, with conditions. The Justice Department says Bayer must sell approximately $9 billion in businesses and assets to BASF. The Department says the proposed divestiture to BASF, which it calls an experienced chemical company with a substantial crop protection business, will fully resolve all horizontal and vertical competition concerns. As a result, the Department says “American farmers and consumers will continue to benefit from competition in this industry.”
The Antitrust Division Tuesday 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. Under the terms of the proposed settlement, Bayer must divest businesses that compete with Monsanto. Those include Bayer’s cotton, canola, soybean and vegetable seed businesses, as well as Bayer’s Liberty herbicide business, a key competitor of Monsanto’s well-known Roundup herbicide.
The divestiture required by U.S. antitrust enforcers “aligns closely” with divestitures the European Union required, according to a source knowledgeable about the agreement between Bayer and the U.S. government.
Makan Delrahim, who heads the Justice Department’s Antitrust Division, says the asset sales agreed to by Bayer were the “largest divestiture ever required by the United States.”
Under agreements with European and other antitrust enforcers, Bayer has agreed to sell assets that include its seed and crop chemicals activities, with revenues of 2.2 billion euros, or $2.6 billion, to rival BASF, 7.6 billion euros.
Bayer 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.
The National Farmers Union (NFU) opposes the merger. Here is NFU president Roger Johnson’s response:
“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,’ Johnson said. “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 said. “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, trai, and crop chemical innovation.”