Bayer CEO Confident Monsanto Purchase Will Be Approved by End of Year -- Update
February 22 2017 - 6:17AM
Dow Jones News
By Christopher Alessi
LEVERKUSEN, Germany--The chief executive of German chemical
conglomerate Bayer AG said Wednesday that he was confident the
company's planned $57 billion acquisition of U.S. seed maker
Monsanto Co. would overcome any regulatory obstacles and close by
the end of the year, despite delays with U.S. and European
antitrust authorities.
Werner Baumann, speaking at the company's annual earnings
conference, said Bayer was in the process of responding to a second
request for information from the U.S. Department of Justice. He
also said the company had pushed back plans to officially file for
regulatory approval with the European Commission to the second
quarter of this year following a request by officials for new
documents on the transaction.
"We remain confident that we will be granted all the necessary
clearances," Mr. Baumann said. "It's not very much of a delay. This
is perfectly normal," he added.
Bayer filed for approval with the Justice Department at the end
of 2016 and had initially planned to file with the EC during the
first quarter of this year. The company has already applied for
clearance from around two-thirds of roughly 30 national regulatory
agencies, the company said.
The planned acquisition of Monsanto comes amid weak market
conditions and a wave of consolidation in the global agrochemical
industry. A merger between Dow Chemical Co. and DuPont Co., as well
as China National Chemical Corp.'s takeover of Swiss pesticide
maker Syngenta AG are also under regulatory review by U.S. and
European officials.
Those deals are further along in the regulatory process and
decisions on them could influence regulators' view of Bayer's bid
for Monsanto, experts say.
The transaction would create the world's No. 1 supplier by sales
of both seeds and pesticides, creating a "one-stop solution for
farmers" that regulators could see as undermining competition,
Ioannis Lianos, a professor and head of global competition law and
public policy at University College London, said recently.
However, the deal received a boost after Mr. Baumann and
Monsanto Chief Executive Hugh Grant met with then President-elect
Donald Trump at the beginning of January. The Trump team--which has
in the past spoken out against foreign takeovers of U.S. companies
and megamergers in general--has since touted the deal and Mr.
Baumann's apparent commitment to create new American jobs.
Mr. Trump's seeming support for the deal has buoyed
investors.
Mr. Baumann on Wednesday called the meeting with Mr. Trump
"constructive" but said he had not been in touch with the president
since then. He also suggested he did not agree with Mr. Trump's
stand on trade and globalization. Limiting free trade makes
"losers" out of all parties involved, he said.
The CEO's comments came as Bayer reported a 26% decline in net
profit from a year earlier, squeezed by one-time expenses for
impairments and litigation, even as it set out ambitious targets
for this year.
Net profit fell to EUR453 million ($477.3 million) in the three
months to end-December from EUR613 million in the same period a
year earlier. Analysts had predicted quarterly net profit of EUR712
million, according to a recent poll conducted by The Wall Street
Journal.
The German company booked impairment charges of EUR170 million
in connection with its implantable contraceptive product Essure,
which has faced lawsuits and scrutiny by the U.S. Food and Drug
Administration over safety concerns. The company also took
impairment charges of EUR160 million related to the integration of
acquired over-the-counter drug businesses.
Nonetheless, Bayer said it expected sales to increase to more
than EUR49 billion this year from EUR46.77 billion in 2016.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
February 22, 2017 06:02 ET (11:02 GMT)
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