German pharmaceutical giant Bayer AG has agreed to the U.S. government’s demand that it sell about $9 billion in agriculture businesses as condition for acquiring Monsanto Co., a U.S. seed and weed-killer maker.
Bayer’s $57 billion takeover of Monsanto has been watched by competitors and environmental groups, which are fearful that the number of players in the business of selling seeds and pesticides will shrink further, according to CNBC.
The DOJ also requires the divestiture of intellectual property, including R&D projects, and Bayer’s “digital agriculture” business to develop new farm technologies to maximize crop yield.
Antitrust regulators at the Justice Department say it’s the biggest divestiture ever required for a merger. The regulators say they directed Bayer to divest assets such as vegetable oils, seeds and seed treatments to ensure fair competition in the market after the massive agriculture business deal goes through. The assets will be sold to BASF, a German chemical company.
All three companies have operations in North Carolina.
While some Bayer operations would move to St. Louis, the company has said it would retain a major R&D center in the Triangle.
Bayer Crop Science and BASF have significant operations in the Triangle.
About 300 Bayer employees in the Triangle could be affected, Bayer spokesman Jeff Donald recently told the Triangle Business Journal.
Bayer’s $57 billion takeover of Monsanto has been watched by competitors and environmental groups, which are fearful that the number of players in the business of selling seeds and pesticides will shrink further.
“Receipt of the DOJ’s approval brings us close to our goal of creating a leading company in agriculture,” said Bayer CEO Werner Baumann, according to CNBC.
“We want to help farmers across the world grow more nutritious food in a more sustainable way,” Baumann said.
Bayer and Monsanto first announced their merger agreement in 2016. The DOJ’s antitrust division has been investigating the merger on concerns that it would drive up seed prices, which would impact farmers as well as consumers.
Bayer, which is strongest in Asia and Europe, stands to gain from Monsanto’s expertise in agriculture and seeds. It would also benefit from the U.S. company’s big presence in North America.
Bayer has said combining the companies would generate synergies of $1.5 billion over three years.
But Bayer is buying Monsanto at a desperate time for American farmers. US farm profit fell to $61 billion in 2016, the lowest since 2006, and less than half the income farms earned in 2013, according to the USDA.
The deal is the latest mega-merger aimed at reshaping the agribusiness and chemical sectors.