Bayer Unloads Assets to Aid Deal -- WSJ
October 14 2017 - 3:02AM
Dow Jones News
By Anthony Shevlin and Natalia Drozdiak
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 14, 2017).
Bayer AG on Friday said it has agreed to sell parts of its
crop-science business to rival BASF SE for EUR5.9 billion ($6.98
billion), a bid to assuage regulators as the German chemical
conglomerate seeks approval for its $57 billion acquisition of U.S.
seed maker Monsanto Co.
Bayer said it would use the net proceeds from the transaction to
partially refinance the purchase of Monsanto, a deal struck last
year that would create an industrial powerhouse and tilt the German
company heavily toward agriculture in a long-range bet on high-tech
crops.
But the megadeal still faces scrutiny from U.S., European and
other antitrust regulators.
"We are taking an active approach to address potential
regulatory concerns, with the goal of facilitating a successful
close of the Monsanto transaction," said Werner Baumann, Bayer's
chief executive.
The European Union in August opened an in-depth investigation
into the Bayer-Monsanto deal, saying it had "serious doubts"
because it could add pressure on farmers already struggling with
low crop prices. Brazil's competition authority in early October
also said it would scrutinize the transaction. The U.S. is also
carrying out a review.
Bayer's deal with BASF is contingent on the successful
completion of the Monsanto deal, which is expected to happen early
next year.
Under the deal announced Friday, BASF will acquire Bayer's
manufacturing sites for glufosinate-ammonium production and
formulation in Germany, the U.S. and Canada; its seed-breeding
facilities in the Americas and Europe; and its trait-research
facilities in the Americas and Europe.
The businesses included in the agreement with BASF generated
about EUR1.3 billion in net sales for 2016, or less than 3% of
Bayer's total.
The seeds businesses being divested include Bayer's cotton-seed
business, with the exception of India and South Africa, as well as
its North American and European canola-seed businesses and the
soybean-seed business.
When it spelled out its concerns with the deal, the EU in August
said Bayer and Monsanto had a high market share in the breeding or
licensing -- and in some cases both -- of vegetable, canola and
cotton seeds. The EU also noted the two companies were the only
firms among a limited number of competitors capable of discovering
new active ingredients and new formulas, such as those that could
tackle the problem of weed resistance to existing herbicides.
Bayer and Monsanto are seeking approval after the EU and other
antitrust bodies cleared the merger of Dow Chemical Co. and DuPont
Co., as well as China National Chemical Corp.'s roughly $43 billion
takeover of Swiss seed and pesticide maker Syngenta AG. The
companies made considerable divestitures to win approval in both
cases.
BASF last year said it would monitor the antitrust concerns over
the big tie-ups to possibly snap up any assets the companies would
have to unload.
"With this acquisition, we are seizing the opportunity to
purchase highly attractive assets in key row crops and markets,"
BASF Chief Executive Kurt Bock said Friday.
Bayer said BASF has committed to maintaining all permanent
positions for at least three years after the transaction is
completed. More than 1,800 Bayer personnel will transfer to
BASF.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
October 14, 2017 02:47 ET (06:47 GMT)
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