Justice Dept. greenlights Bayer-Monsanto merger

By JIM RUTLEDGE

D.C. Correspondent

WASHINGTON, D.C. — The U.S. Department of Justice’s (DOJ) approval last week of the takeover of Monsanto Co. by German chemical giant Bayer AG created the world’s largest provider of seed and agricultural-chemicals – a $62.5 billion agreement finally approved after the two corporations began selling off $9 billion in assets.

It is the largest merger ever of corporate businesses to win antitrust approval, the government stated. The announcement followed a U.S. and international review process by government competition agencies around the world. Within the past few months, regulators from the European Union, Russia and Brazil have approved the controversial merger.

Canada’s Competition Bureau gave its approval last Thursday and Bayer said Mexico’s antitrust officials are expected to announce their decision in the coming days.

As part of the proposed settlement, Bayer will finalize selling its seed and herbicide businesses that compete directly with the St. Louis, Mo.-based Monsanto to Bayer’s European rival, BASF SE, a German chemicals group. These include Bayer’s cotton, canola, soybean and vegetable seed businesses, as well as Bayer’s Liberty herbicide business – a key competitor to Monsanto’s popular Roundup herbicide – antitrust regulators said at a May 29 news conference.

Also as part of the settlement, Bayer will sell its emerging digital farming business and a variety of intellectual property assets and research and development (R&D) projects, also to BASF. The DOJ said Bayer would transfer several research facilities to BASF, including a research center in North Carolina and a bank of soybean tissue samples used to develop new products.

“Without the agreed-to divestitures, the proposed merger would likely result in higher prices, lower quality and fewer choices across a wide array of seed and crop protection markets,” the DOJ stated.

“The largest merger divestiture every required by the United States – preserves competition in the sales of these critical agricultural products and protects American farmers and consumer,” said Makan Delrahim, assistant attorney general of the DOJ’s Antitrust Division.

Bayer first announced its plans to spin off parts of its assets in October to BASF SE, selling certain seed and herbicide assets for $7.5 billion, as reported by Farm World in April.  At the urging of European Competitive Commission regulators, Bayer announced on April 16 it had agreed to sell its vegetable seed unit, also to BASF, for nearly $1.8 billion.

Last week’s DOJ decision concluded negotiations between the two companies to win over antitrust regulators that began when the deal was first announced in September 2016. Highly critical of the merger was the farm group Organization for Competitive Markets (OCM), which published a March survey of more than 140 farm and community organizations, finding the majority of the parties opposed the merger.

“Today’s news makes it clear that our anti-monopoly laws are completely worthless and the U.S. Department of Justice merger review process is pointless,” the OCM stated. “America’s family farmers will pay the price for this action, and consumers will see fewer choices in the market. Where is the justice in the Department of Justice?

“The fact that DOJ has now allowed one company to control 77 percent of seed corn, 69 percent of all seed traits and 58-97 percent of the markets in cotton, soybeans and canola, means DOJ has just authorized a monopoly.”

Angela Huffman, a spokesperson for OCM, said in an email to Farm World, “We believe that allowing these two mega-corporations to merge in an already heavily concentrated market can only result in higher input costs. Until the details of the settlement are published, we will not be able to fully analyze it, but on its face, $9 billion in divesture is less than one-sixth of the total deal, leading us to still have grave concerns.”

National Farmers Union President Roger Johnson said, “The deal will consolidate control of more than a quarter of the world’s seed and pesticides market and create the largest seed and crop chemicals company in the world.”

He called the consolidation just another in a series of multibillion-dollar agribusiness mergers in the past year “extreme” that “drives up costs for farmers” and will “limit their choice of products in the marketplace. It also reduces the incentive for the remaining agricultural input giants to compete and innovate through research and development.

“While we appreciate the significant divestitures agreed to as part of this approval,” Johnson added, “the Farmers Union condemns DOJ’s continued rubber-stamping of mergers in the food and agriculture arena.”

From Canada, Lucy Sharratt of the Canadian Biotechnology Action Network, which has long opposed the merger, called the approval “an unprecedented level of corporate control over seeds and pesticides.” Martin Settle of USC Canada added, “If you control seeds, you control farmers and you control food.”

The terms of the proposed settlement, the DOJ said, along with its antitrust division’s competitive impact statement, will be published in the Federal Register. Those wishing to comment on the merger may mail written responses within 60 days of its publication to: Kathleen S. O’Neill, Chief; Transportation, Energy and Agriculture Division; U.S. Department of Justice; 450 Fifth St. N.W., Suite 8000; Washington, D.C. 20530.

At the conclusion of the 60-day comment period, the DOJ said the federal court will enter a final judgment declaring that the merger serves the public interest.

Now that the DOJ has given thumbs-up, Bayer’s chair Werner Baumann said the two companies expect to close the transaction as scheduled on June 14. At that time, Monsanto’s chief executive, Hugh Grant, 60, will leave the company as planned after being with it for 35 years. It was announced last month six other top Monsanto executives will leave as well.

Once Bayer formerly closes the acquisition, the company said a new executive leadership team will transition to its new Crop Science division and will be led by Liam Condon at its headquarters in Monheim, Germany. Eleven other executives will assume new roles, eight in Germany and four at Monsanto’s former headquarters in St. Louis.

Joining Condon will be Robert Reiter as head of R&D; Dirk Backhaus leading Product Supply; Jesus Madrazo, Agricultural Affairs & Sustainability; James Swanson, Crop Science chief information officer; Gabriele Oehlschlaeger, Human Resources; Lars Benecke, Law, Patents and Compliance; and Martin Dawkins, Post-Merger Integration.

In St. Louis, Brett Begemann will become head of Commercial Operations, moving from chief operations officer at Monsanto. Joining him will be Michael Stern, head of Digital Farming/Climate Corp., from his former CEO job at Monsanto’s The Climate Corp.; and Frank Terhorst leading Crop Strategy & Portfolio Management, moving from Bayer’s Crop Science Division where he was Pre-Merger Planning director.

Last year, U.S. and European Union regulators approved two other sizable deals: Dow Chemical’s merger with DuPont Co. and the Syngenta AG takeover by China National Chemical Corp.