European Commission Approves Bayer’s Acquisition of Monsanto

The European Commission (EC) conditionally approved Bayer’s proposed acquisition of Monsanto. Bayer CEO, Werner Baumann, says that the receipt of the European Commission’s approval is a major success and a significant milestone.

“Together with Monsanto, we want to help farmers across the world grow more nutritious food in a more sustainable way that benefits both consumers and the environment.” Bayer has now received approvals for the transaction from substantially more than half of the some 30 regulatory authorities, including those in Brazil and China.

The conditions cover in particular the divestment of certain Bayer businesses, including the global field crop seeds business such as canola, cotton, and soybean (with minor exceptions restricted to the Asia region), the R&D platform for hybrid wheat, the global vegetable seeds business, the global glufosinate ammonium business, as well as certain glyphosate-based herbicides in Europe, predominantly for industrial use. In addition, Monsanto’s global business with the nematicide NemaStrike must be divested. The conditions also stipulate the transfer of three Bayer research projects in the area of non-selective herbicides and the granting of a license to Bayer’s digital farming portfolio. BASF is the intended purchaser of these assets.

The transaction remains subject to customary closing conditions, including receipt of required regulatory approvals. Bayer and Monsanto are working closely with the authorities – including the Department of Justice in the United States – with the goal of closing the transaction in the second quarter of 2018.

In 2016, seed and chemical giants Bayer and Monsanto announced that they merge to become one of the world’s biggest agriculture giants, a USD66bn mega-deal that could reshape the future of farming and enhance their influence over the planet’s food supply.

The EC opened an in-depth investigation to assess the proposed acquisition, as the Commission had been concerned that the merger may reduce competition in areas such as pesticides, seeds and traits.

The new company would combine two competitors with leading portfolios in non-selective herbicides, seeds and traits, and digital agriculture. Both companies are active in developing new products in these areas. Moreover, the transaction would take place in industries that are already globally concentrated, as illustrated by the recent mergers of Dow and Dupont and Syngenta and ChemChina, in which the Commission intervened to protect competition for the benefit of farmers and consumers.

Commissioner Margrethe Vestager, in charge of competition policy, said at the moment: “Seeds and pesticide products are essential for farmers and ultimately consumers. We need to ensure effective competition so that farmers can have access to innovative products, better quality and also purchase products at competitive prices. And at the same time maintain an environment where companies can innovate and invest in improved products.”