BRIEF—US clears Bayer/Monsanto merger, but with massive divestments

German pharma and crop sciences major Bayer’s $66 billion acquisition of agrichemicals giant Monsanto has passed its final important hurdle, with approval of the deal - struck in 2016 - from the US Department of Justice, but requires $9 billion worth of divestments.

The proposed divestiture to Germany-headquartered BASF, the world’s largest chemical company with a substantial crop protection business, will fully resolve all horizontal and vertical competition concerns, the DoJ stated.

“This comprehensive structural solution to significant horizontal and vertical competition concerns - the largest merger divestiture ever required by the United States - preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” said Assistant Attorney General Makan Delrahim of the Antitrust Division.

Under the terms of the proposed settlement, Bayer must divest those Bayer businesses that compete with Monsanto today. These 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 settlement, which still needs court approval, also requires structural divestitures to remedy the competitive harm that would result from the vertical integration of certain significant Bayer seed treatment businesses with Monsanto’s leading seed businesses.

According to the DoJ’s conditional approval, the integration of Monsanto into Bayer can take place as soon as the divestments to BASF have been accomplished. This is expected to be in approximately two months, Bayer announced, adding: “Bayer has now obtained almost all clearances which are conditions for closing the transaction. The company expects to receive any outstanding approvals required for completing the transaction very shortly.”