BASFY BASF SE (QX)

By Zeke Turner and Natalia Drozdiak 

German chemical giant Bayer AG on Wednesday said it would sell more assets to win antitrust approval for its $60 billion-plus takeover of Monsanto Co., as it inches toward completing its regulatory reviews.

Chief Executive Werner Baumann said the company was preparing the sale of another bundle of assets after agreeing in October to sell parts of its crop-science business to rival BASF SE for $7 billion.

"We have now also committed to divest our entire vegetable-seed business, " Mr. Baumann said, adding that additional businesses may be sold or licensed. He declined to say what the assets could be worth of what share of Bayer's revenue they could represent.

Those assets could also be sold to BASF, according to people familiar with the matter. In addition Bayer has agreed to grant BASF a license for its digital-farming data, the people said.

The review by the European Commission, the bloc's antitrust regulator, appears headed toward conditional approval, people familiar with the matter say. The commission, which has flagged concern that the deal could pressure farmers, is expected to decide by April 5, though the regulator could issue its ruling earlier.

Bayer has faced delays in winning antitrust approval in the U.S. and Europe over its plans to buy the U.S. seed maker, a deal which will create an industrial powerhouse and tilt the German company heavily toward agriculture in a long-term bet on high-tech crops. The delays are partly because of negotiations over asset sales and the large amount of documents regulators have to wade through as part of their probes. A review by the U.S. Department of Justice is also ongoing.

Mr. Baumann expressed optimism that the deal would ultimately win regulatory approval, with the Committee on Foreign Investment in the U.S., or CFIUS, and authorities in Brazil already giving the nod.

Bayer is now aiming to complete the takeover of the St. Louis-based company in the second quarter, having previously hoped to close in early 2018. The deal was struck in September 2016 amid a wave of consolidation in the industry.

Bayer said the enterprise value of the Monsanto takeover has now fallen to $62.5 billion, from $66 billion, after the U.S. company paid down some of its debts.

The update on the deal came as Bayer reported worse-than-expected fourth-quarter earnings and guidance, prompting its shares to fall 3%.

The company said net profit fell 67% in the last three months of 2017 to EUR148 million ($181 million), compared with EUR453 million a year earlier, and below forecasts of EUR745 million.

Earnings were hit by a EUR455 million charge related to U.S. tax reform and ongoing difficulties with its crop-science business in Brazil, a key agricultural market that has been batting its way out of a recession.

All of Bayer's business units reported lower quarterly sales and all but pharmaceuticals posted lower operating profit.

Full-year net profit rose nearly 62% to EUR7.34 billion. The discrepancy with the weak fourth quarter is partly related to the sell down of its stake in Covestro AG in late 2017.

This year Bayer executives hope to get a boost from the Monsanto deal but on Wednesday the company said it expects sales and earnings to remain at 2017 levels.

The forecast includes expected supply interruptions because of plant maintenance. Adjusted for currency effects and changes to its portfolio, including the takeover, Bayer said it expects sales to increase by a low-to mid-single-digit percentage.

However, Bayer said it remains in good financial shape for the Monsanto takeover. It has reduced its net debt by nearly 70% over the past year to EUR3.6 billion, largely because of the sale of most of its stake in Covestro. Bayer continues to hold 14.2% in the plastics company, which it separated from in 2015. Its pension trust holds another 8.9%, the company said.

--Nathan Allen contributed to this article.

Write to Zeke Turner at Zeke.Turner@wsj.com and Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

February 28, 2018 10:23 ET (15:23 GMT)

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